TO CONTINUE this little theme dealing with the current BOGYMAN of the moment, interest rates: Rising Rates Don’t Challenge Stocks https://www.fisherinvestments.com/en-us/marketminder/rising-rates-dont-challenge-stocks (quotes are bold) There is no shortage of plausible-sounding financial theories—and many persist even despite repeated debunking. A popular one rearing its head again is that higher interest rates for cash and bonds mean stocks will fall out of favor. With 3-month, cash-equivalent Treasury bill yields over 2%—broadly matching inflation—and 10-year note yields making seven-year highs at 3.2%, the thinking goes these seemingly “risk-free” rates are attractive enough to lure folks out of stocks and end the bull. However, history shows this thesis has quite a few holes. Long rates depend on future inflation, and all signs point to benign prices for the foreseeable future. Despite allegedly jumpy rates, the US yield curve has flattened over the past eight months, and the global yield curve has barely budged over the past year. This should keep money supply growth rather benign, which in turn should keep inflation from running away. And keep bond yields tame. Exhibit 1: Stocks’ Earnings Yield Isn’t Correlated With Bonds’ Source: FactSet, as of 10/4/2018. S&P 500 12-month forward earnings yield and 10-year Treasury yield, January 1996 – September 2018. Comparing stocks’ earnings yields to Treasury yields isn’t a timing tool. Nor does it come anywhere near predicting stocks long-term returns. Plus, historical long-term government bond total returns aren’t close to stocks’. If your long-term financial goals require equity returns, bonds won’t give you that. Many investors don’t see stocks and bonds as competitors, either. Rather, many long-term growth investors will own some bonds alongside stocks in order to dampen expected short-term volatility. Those arguing interest rates are a driver are setting up a false either/or choice. Some also suggest cash is more competitive, too. But for the same reasons, cash is even less compelling than bonds for long-term investors........ if you are investing for the next 10, 20, 30 or more years, and you need long-term growth to meet your objectives, a return that barely beats inflation probably won’t get you there. There are long stretches where stocks rise along with Fed rate hikes and bond yields. There are also times they don’t! Interest rate levels don’t dictate stock returns. Investors shouldn’t be led astray by them either. MY COMMENT INVESTORS that are smart and experienced are not concerned about rate increases in the least. In fact I welcome the rate increases. It is about time that we got back to normal rates in the bond markets and mortgage markets. What WILL MATTER going forward will be the usual, EARNINGS, company MANAGEMENT, and hard facts about individual businesses since after all when you buy a stock you are buying a very specific business model. We are just starting to shake off the governmental foolishness of the past 8-10 years and the deflationary period that those policies created and prolonged. My simple opinion is that we are positioned to continue the market advances that we have seen for the past years and especially for the past two years. LONG TERM INVESTORS will continue to be rewarded by investing in stocks and funds, especially those that are "AMERICAN COMPANY" focused and "BIG CAP" focused. The 2-3% that dividends add to the SP500 and the DOW are significant drivers of performance and will be going forward as long as they are reinvested in the markets.