A Quote by Bill Gross
It's sort of like a teeter-totter; when interest rates go down, prices go up.
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No, see the slide’s too high. He could fall and get a concussion. (Wulf) Forget that. He could rack himself on the teeter-totter. (Chris) Teeter-totter nothing. The swings are a choking hazard. Whose idea was it for him to have this? (Urian)
It's one of the fundamental principles of the stock market: When interest rates go up, stocks go down. And along with financial companies and cyclicals, technology companies - with their sky-high price-to-earnings multiples - should be among the biggest losers in an environment of rising rates.
Americans now know that housing prices can go down and they can go down by 10, 20, 30, and in some cases, 40 or 50 percent. We know they can go down. But five years ago, we thought they could only go up.
Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices.
To pump up consumer or government demand would force interest rates up and asset prices down, possibly by enough to destroy more jobs than are created.
Interest rates are going to go up because employment is going to go up. If employment goes up, then our apartments get filled. And if employment goes up, our office buildings get filled. The reality is that increased economic activity combined with increased interest rates is basically bullish for real estate.
Demonetisation is a disinflationary process. So, this will bring down prices in the long run. It will also help in bringing down interest rates.
I understand that one of the purposes of bipartisanship is to cram something difficult and necessary down the American people's gullets for which neither party has the fortitude to assume full responsibility. It's a way of turning a possible gangplank into a teeter-totter.
If you put Canada into $1.5 trillion in debt and interest rates go up just 200 basis points, you cannot provide the services to 36 million people that were guaranteed to them in the social contract they have with Canada. That's a very, very scary prospect. You can't burden this economy with that much debt. The risk you take on is insurmountable. You have to assume for the next 50 years that rates don't go up? That's insane. That's irresponsible. That's stupid.
The underlying strategy of the Fed is to tell people, "Do you want your money to lose value in the bank, or do you want to put it in the stock market?" They're trying to push money into the stock market, into hedge funds, to temporarily bid up prices. Then, all of a sudden, the Fed can raise interest rates, let the stock market prices collapse and the people will lose even more in the stock market than they would have by the negative interest rates in the bank. So it's a pro-Wall Street financial engineering gimmick.
For each Joan of Arc there is a Hitler perched at the other end of the teeter-totter.
I think bubbles are things people see with 20/20 hindsight. If you look at any particular period where prices go up and then they go down, you will always find people who predicted that they would go down. Those are the people you pay attention to.
A lot of female comedians will go up there in a sweatshirt and Converses, trying to dress themselves down, because it is sort of a boy's club. I'll go up in my heels. I like that people don't think I'll be funny. I'll take that on. I don't do standup comedy - I do standup and I do comedy, but I don't go up there and do jokes.
The key is if the economic data stays soft, maybe we don't have to worry much about interest rates anymore. Then we need to worry about earnings. What gave us a really strong move in stock prices from late May until about two weeks ago was this heightened optimism that maybe interest rates are at that high. That gave you a relief rally. Now reality is setting in - if we've seen the worst on interest rates then we've seen the best on earnings.
In commodities, when prices go up, demand goes down. In stocks, when prices go up, demand goes up.
See the investment world as an ocean and buy where you get the most value for your money. Right now the value is in non-callable bonds. Most bonds are callable so when they start going up in price, the debtor calls them away from you. But the non-callable bonds, especially those non-callable for 25-30 years, can go way up in price if interest rates go way down.
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