- The P/E multiple expansion seen in stocks from the 1980s through the 2010s was largely driven by falling interest rates and this is unlikely to persist going forward.
- Interest rates have already hit zero and now seem to be rebounding to a higher level in the face of high inflation.
- Stocks may be facing a “lost decade,” wherein stock prices remain volatile or rangebound for years and years.
- During periods of volatility or rangebound markets, dividends play a more important role in generating returns for investors.
For further details see:
Warning Signs Of A 'Lost Decade' - Focus On Dividends