| From the Desk of Don Yocham: Time is money.
Or, more precisely, time costs money. And thanks to the Federal Reserve, money costs a lot less over time than it did 20 years ago.
On the eve of the 21st Century, the Fed managed the price of borrowing money overnight at 5.3%. Today, it sits at 0.06%.
And that manipulation has brought the cost of money down across the board, whether you borrow money overnight or for 30 years.
For example, the price of risk-free money for 5 years went from 6.36% to 1.43%. For 10 years, it went from 6.45% to 1.41%. And for 30 years, it dropped from 6.48% to 2.09%.
Interest rates sit at a mere fraction of what they were 20 years ago. That means a dollar worth of profits is worth a lot more now than it used to be.
But traditional valuation metrics don't account for the price of money. In fact, they miss a lot.
|
|
|
|
| Disclaimer & Disclosures
The information in this email is intended for informational purposes only and does not guarantee specific results as there is a high degree of risk involved with trading. Also, our traders are real traders and may have financial interests in the companies discussed. Please see our Terms and Conditions for more information.
|
|
|
|
|
|
This email was sent to edwardlorilla1986.paxforex@blogger.com by Long Weekend | |
|
|
|
|
No comments:
Post a Comment