Interactive Brokers Is a Sneaky Way to Profit From High Interest Rates
"Higher for longer" interest rates could help this leading brokerage sustain double-digit earnings, dividends, and share price growth.
Overview
Last week, Federal Reserve Chairman Kevin Warsh held his first Federal Open Market Committee (FOMC) meeting, making statements strongly suggesting a "higher for longer" interest rate policy, including possible rate hikes down the road.
For stock market investors, this could be concerning. Stocks, particularly speculative growth stocks, often trade inversely with interest rates. As rates go up, valuations could come down. Yet while Warsh's policy plans could create new headwinds for the broad market, these changes could be a potential boon for one major financial institution: Interactive Brokers (NASDAQ: IBKR).
Details
Why? The discount broker, a pioneer in electronic trading, generates a majority of its overall revenue from interest. Hence, like with financial stocks and bank stocks, "higher for longer" bodes well for Interactive Brokers.
Source
Originally published at www.fool.com.