Investing with Exchange Traded Funds Made Easy: Higher Returns with Lower Costs—Do It Yourself Strategies Without Paying Fund Managers

Chapter 11. What Bonds Can Tell You About Stocks: How to Use Interest Rates

Interest rates are perhaps the most important factor that influences the stock market as a whole. However, translating a knowledge of interest rates into a specific plan of action for your equity investments is no simple matter. In a nutshell, two important features of the interest rate climate are important to follow when you’re an equity investor:

• Whether interest rates as a whole are rising or falling

• Whether it costs more for the U.S. Treasury to take out long-term loans or short-term loans

This chapter describes how the interest rate environment (as reflected in bond market data) affects the stock market. It also explores some simple rules to help you use interest rate ...