The S&P 500's Safety Net Is Disappearing. History Says Investors Shouldn't Ignore It.
Stocks have benefited from low or falling rates for years. Today's higher-rate environment changes the outlook.
Overview
For the vast majority of 2009 to 2022, U.S. stocks had a powerful tailwind at their back: ultra-low interest rates.
Lower rates made bonds less competitive. They reduced the discount rate applied to future corporate earnings. They helped support higher stock valuations.
Details
All of these factors were broadly positive for equities, including the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the Vanguard Total Stock Market ETF (NYSEMKT: VTI).
Source
Originally published at www.fool.com.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Data may be delayed up to 15 minutes. Past performance is not indicative of future results. Consult a licensed financial advisor before making investment decisions.