The era of low interest rates is fading away, forcing investors to reassess their strategies

  • The era of cheap money is coming to an end as the Federal Reserve continues to raise interest rates
  • Investors are now facing competition from cash and short-term instruments that offer attractive returns
  • The end of the ‘TINA’ phenomenon (there is no alternative) to equities is driving investors to reassess their investment strategies
  • The distortions created by years of central bank quantitative easing and loose monetary policy are fading away
  • The shift to a quantitative tightening monetary policy is yet to fully impact the stock market
  • Companies without profits are facing challenges as the cost of capital rises
  • Investors should expect lower returns as the cost of capital is no longer subsidized by the central bank
  • The playbook that worked in the aftermath of the financial crisis may no longer apply
  • Investors who have parked money in cash may face reinvestment risk and miss out on income from bonds
  • Long-term bullishness on bonds is difficult without a significant increase in productivity

The era of cheap money is coming to an end as the Federal Reserve continues to raise interest rates. Investors are now facing competition from cash and short-term instruments that offer attractive returns, challenging the dominance of equities. The distortions created by years of central bank quantitative easing and loose monetary policy are fading away, leading to a new world for investors. Companies without profits are facing challenges as the cost of capital rises. Investors should expect lower returns as the cost of capital is no longer subsidized by the central bank. The playbook that worked in the aftermath of the financial crisis may no longer apply. Investors who have parked money in cash may face reinvestment risk and miss out on income from bonds. Long-term bullishness on bonds is difficult without a significant increase in productivity.

Public Companies: BlackRock Investment Institute ()
Private Companies: Strategas Research Partners, Thornburg Investment Management, Oaktree Capital Management, New York Life Investments
Key People: Jason Trennert (Chairman and CEO at Strategas Research Partners), Edward Chancellor (Investor and author), Jeff Klingelhofer (Unknown), Rob Costello (Unknown), Howard Marks (Co-Chairman of Oaktree Capital Management), Lauren Goodwin (Economist and Portfolio Manager at New York Life Investments), David Kelly (Unknown)

Factuality Level: 7
Justification: The article provides information about the end of the era of low interest rates and the consequences of this shift for investors. It includes quotes from experts and references to data and research. However, there are some tangential details and repetitive information that could be considered irrelevant.

Noise Level: 6
Justification: The article provides some analysis of the consequences of the end of cheap money and the shift to a quantitative tightening monetary policy. It discusses the distortions created by central bank quantitative easing and ultraloose monetary policy, as well as the potential impact on various asset classes and the stock market. However, the article lacks scientific rigor and intellectual honesty as it relies heavily on quotes from individuals without providing much evidence or data to support the claims made.

Financial Relevance: Yes
Financial Markets Impacted: The article discusses the end of the era of extremely low interest rates and the impact it has on investors, companies, and the stock market.

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article primarily focuses on the financial implications of the end of low interest rates and the consequences for investors and companies. There is no mention of any extreme events.

Reported publicly: www.marketwatch.com