interest rates go up, stocks go down, but why? yes, it costs more to borrow, but they already borrowed the money, let's say last month, and already bought shares) at a fixed interest rate, so why would they have to sell their existing shares? this make no sense to me and i can't find the answer anywhere on the internet and peter schiff is not answering me! unless the loan from the bank was not fixed? i borrowed money from td bank canada (line of credit) and bought shares of stocks, and my interest rate is the same. things are different in the usa?
For stocks, it can go either way because a stock’s price depends on both future cash flows to investors and the discount rate they apply to those expected cash flows. When interest rates rise, the discount rate may increase, which in turn could cause the price of the stock to fall. However, it is also possible that when interest rates change, expectations about future cash flows expected from holding a stock also change.
