By Dr. Steve Sjuggerud, editor, True Wealth:
Interest rates are headed higher in 2015… and most investors see that as a bad thing for the U.S. stock market.
But is it?
I don’t think it is…
I think we still have plenty of upside potential from here.
Let me explain…
For years now, our working script has been that we’re in “the Bernanke Asset Bubble.”
The basic idea of our script has been that the Federal Reserve would keep interest rates lower than anyone could imagine for longer than anyone could imagine. And that would cause asset prices – like real estate and stocks – to soar higher than anyone could imagine.
That’s exactly what has happened. Rates have been near zero since 2008… six long years. But we’re now much closer to the end of near-zero rates than the beginning.
The Federal Reserve has achieved its goals… low unemployment and mild inflation. And higher interest rates are likely starting next year.
So what will happen when the Fed finally raises interest rates?
Most investors think the rate hike will kill the stock market boom.
Their basic thought is: “Stocks are going up because of the Fed’s low interest rates and money printing. Once those end, the fun is over.”
Logic says that higher interest rates should hurt stocks. After all, higher rates raise borrowing costs for companies, and they allow you to earn more money on your cash in the bank (which creates competition for stocks).
But history tells a different story… Rising rates