Broken Pie Chart
Broken Pie Chart
May 15, 2022
Why Interest Rates Effect Stock Market Valuations
Play • 25 min

Derek Moore explains why commentators on CNBC and Bloomberg have been talking about valuations coming down due to interest rates increasing. Why do interest rates matter to stock valuations? How would you explain it to someone? Plus, how all these inputs are estimates and can change over time.

 

How to understand the present value of future cash flows

DCF or discounted cash flow model

Earnings estimates on the market for 2022, 2023, and 2024

Intrinsic valuation of the S&P 500 Index based on different index rates

What is the equity risk premium?

What is the discount rate?

How does the 10-year treasury bond interest rate factor in?

What is the terminal rate of growth for markets?

 

 

 

Mentioned in this Episode:

 

Jurrien Timmer of Fidelity 2-Year Treasury Yield Implied PE vs Forward PE S&P 500 Index https://twitter.com/TimmerFidelity/status/1525190396413894657

 

Professor Aswath Damodaran S&P 500 valuation estimate worksheet https://aswathdamodaran.blogspot.com/2022/05/in-search-of-steady-state-inflation.html

 

Contact Derek Moore derek.moore@zegafinancial.com

 

ZEGA Financial www.zegafinancial.com

 

Derek Moore’s Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

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