is consumer sentiment more important to investment decisions that variations in interest rates?
396889
Are you investing into a company that is highly leveraged?  Meaning does it have a lot of debt?  If it does, interest rates are important.  \nIn regards with consumer sentiment, there are certain companies that are less sensitive to consumer sentiment.  For example food industry is really not impacted by consumer sentiment because we all got to eat right? =)  Electronics makers are very susceptible to consumer sentiment because you will buy food before you buy that new iPod, though at the rate this country (USA) is going things may change soon.\n\nAleks
153063
try newsfutures.com the accuracy of something like this is 91% so that's money in the bank if you don't have your personal feelings in the mix but then if you do that site can back up your choices.
106025
It is a sound theory, but you need to fill some gaps.  \n\nThere is no direct causal relationship between R&D and consumer confidence.  But you can still make a connection by assuming that when government encourages or funds R&D, its results (say, gene therapy) gives public a sense of hope and progress, which in turn increases consumer confidence and improves economy. \n\nYour second statement is a generally true proposition.  Voters tend to re-elect the same president if the economy was good.  However, the most recent presidential election disproves that theory.  Economy is not the only or determining factors in presidential elections, but it’s an important one.
274167
It depends. If the firm has fixed-rate long-term debt, then changing interest rates would not affect is profitability unless the company were to reacquire that debt in the open market prior to maturity. If the long-term debt has a variable interest rate, then the firm would be affected by changing rates. In the short-run, many firms have lines are credit that are almost always based on current market rates, so changing interest rates would affect their short-term borrowing expenses.
870729
Depends on the business I guess. Your second question affects the first. So I'll try to answer that first. An increase in interest rates usually drives up the value (strength) of the currency. The higher the interest rate, the more foreign money and banks themselves invest in that currency driving up its value due to supply and demand laws.\nIf they are an exporter, then that is bad news as it becomes dearer for customers abroad to buy their goods and so they lose business. For importers the opposite applies it being cheaper for customers here to buy imported goods due to the strength of the currency which buys you more(more bang foryour buck).\nRemember though that if, as most companies have to, that they have to borrow money to invest, then higher rates are obviously a disincentive. However higher rates keep down inflation which is of course is a good thing. You are right to be confused as there is no single, easy solution.Otherwise governments would just keep raising rates or freezing them. Like all markets,balance must be maintained.
951801
Probably more important considering the interest.\n\nSeriously though, you assume money is important to me now, which it is not.
353535
In general, yes they are.\n\nMortgage rates are based on inflation.  When there is greater risk of inflation rates trend higher.\n\nCurrently, if you look around at the cost of goods that you buy day to day... things are a little more expensive.  (Gas to say the least).\n\nAdditionally, foreign monetary policy is starting to frown on the US treasury as an investment.  This means that we will probably see further deterioration of the dollar, probably not too much, but enough, to attract investment...\n\nIn a nutshell, I don't have a positive rate outlook.
11257
Your question asks if the state of the housing market is one extreme (bubble) or the other (media hype), but I think the answer lies somewhere in between and also depends on your personal circumstances.\nThe general market appears to moderating and by "moderating" I mean the rate of housing price growth is slowing.  This doesn't mean that prices are falling.  The media often misses this subtle, yet important distinction.  Slowing price increases are a good thing because it means that the market is starting to act more rationally.  We all know that prices can't continue to increase at the same rate they have for the past 3-5 years (+10 to +30% a year).  So, the moderation of these increases are not a sign of trouble.  They're a sign of a return to rationality.\nWhat would be a sign of trouble?  A few things come to mind:\n- A substantial increase in job losses and unemployment on a national and, more importantly, a local level.  Think about how business is doing in the L.A. area and where it is likely to go in the future.\n- A substantial increase in the long-term interest rates would be worrisome because fewer people will be able to afford to buy your house for a high price.  Notice I said "substantial".  Everyone knows that rates will go up slightly over the next year or two.  But that's natural as our financial markets try to get to a normal interest rate level.  Our current rates are abnormally low and returning to 7% ish isn't such a bad thing.\n- We restrict immigration substantially.  Immigration trends are driving the demand for first-time home buyers in the U.S.  If we restrict the number of people who can enter our country, become productive citizens and eventually buy a home, we'll lower demand for housing.  Especially in Los Angeles!\nI don't trust the media to give me a balanced view of the housing (or any other) market because that's not their objective.  Media's goal is to get you to watch and they wouldn't get very many viewers if they said that the market would likely just moderate going forward with only slight increases for the future.  They get much more attention when they find data that will allow them to make dire predictions and predict doom and gloom.\nCurrently, the prices of houses are being driven by people's ability to afford the monthly payment and the supply of people looking to purchase houses.  I think that increasing rates will lower the prices a little bit, but I don't think prices will fall significantly causing many people to lose many and file bankruptcy.  I personally don't know anyone who is overleveraged and would be devastated by a decline in housing prices.  They would just continue paying their mortgages and living in the house.  However, when I talk to people about the market, they all think there is a significant population of people who are going bankrupt.  I'm not sure there is much real data to support this paranoia, however.\nNow, to address the second part of my answer -- your personal situation.  If you buy a house for the right personal reasons, then you won't have to worry about future housing prices as much.  If you're committed to staying the local area and you have professional job stability, then you will have more security to ride out any short-term price fluctuations.  Additionally, you should consider the value of owning versus renting along other lines than pure investments.  What is the value of owning your own residence and being able to upgrade various amenities when and how you please?  (Hey - new jet tub! Granite countertops!)  What is the value of being able to demonstrate security to your family and friends?  (Honey, I really am committed to building a family!)  What is the value of not having to deal with landlords and other renting hassles?\nI'm not saying there are concrete answers to those questions, but you should consider them and if they have high value to you, then
496967
There's actually some debate about this.  Traditional wisdom says that high interest rates lower capital outflows and low interest rates increase it.  But if the raising of interest rates comes close to a possible default, the risk premium will make the capital account worse off.
79885
It depends on how long you can leave your money invested. The higher the returns you seek, the more risk of short term losses you are going to need to accept. If you do not have a long time to stay invested you need to pick more conservative investments. Over the long term, the highest returns are earned by stocks, with small company stocks edging out larger company stocks. Bonds will typically give you lower rates of return than stocks, but less unpredictability. CD's and money markets are at the low end return-wise, but have virtually no chance to losing value.\n\nSeek the advice of a financial planner. Have him/her help you complete a Risk Tolerance Analysis. The results of this analysis will guide you to the proper mix of assets for your particular savings goal.
106194
If I knew the answer to that, I could become a multi-millionaire this year. The main negative for the stock market is rising interest rates as they have a negative impact on consumer spending. On the other hand rising interest rates are supporting the value of the dollar because they are attracting foreign money.  \n\nAt some point consumers will not be able to continue spending more than they make. They have been doing this for the last six or seven years. When this happens--perhaps later this year, perhaps not--the chickens will come home to roost.
981569
In general, yes, because it's more representative. But the current PE is important also, since that's the price you're buying at, if you decide to buy.
475784
Risks of Investing in Bonds\nAll investments offer a balance between risk and potential return. The risk is the chance that you will lose some or all the money you invest. The return is the money you stand to make on the investment.\n\nThe balance between risk and return varies by the type of investment, the entity that issues it, the state of the economy and the cycle of the securities markets. As a general rule, to earn the higher returns, you have to take greater risk. Conversely, the least risky investments also have the lowest returns.\n\nThe bond market is no exception to this rule. Bonds in general are considered less risky than stocks for several reasons:\n\nBonds carry the promise of their issuer to return the face value of the security to the holder at maturity; stocks have no such promise from their issuer. \nMost bonds pay investors a fixed rate of interest income that is also backed by a promise from the issuer. Stocks sometimes pay dividends, but their issuer has no obligation to make these payments to shareholders. \nHistorically the bond market has been less vulnerable to price swings or volatility than the stock market. \nThe average returns from bond investments have also been historically lower, if more stable, than average stock market returns.\n\nHigher Risks=Higher Yields\nA specific bond’s risk level is reflected in its yield, another name for return on a bond investment. “Current” yield is a function of the bond’s:\n\nCoupon rate: the annual interest rate the issuer promises to pay the investor, stated as a percentage of the bond’s face value or “par,” which is the amount the investor can expect to have returned on the bond’s maturity date. \nCurrent price, which may be a premium (more than) or discount (less than) in relation to the bond’s face or par value. \nYield-to-maturity reflects the relationship between the total coupon interest payments remaining between now and maturity, and the difference between today’s market value (price) and par value. Yield-to-call is the same calculation based on the total coupon interest payments remaining between now and the first call date (rather than the maturity date) as well as the difference between today’s market value (price) and the call price.\n\nThe higher the risk in a given bond, the higher its yield needs to be to compensate the investor for taking the risk. When the market perceives the yield on a bond to be too low, its price will fall to bring the yield in line with market expectations or prevailing interest rates.\n\nIt’s All Relative to “Riskless” Treasury Yields\nBonds issued by the U.S. Treasury are backed by the full faith and credit of the U.S. government and therefore considered to have no credit risk. The market for U.S. Treasury securities is also the most liquid in the world, meaning there are always investors willing to buy. U.S. Treasury yields will almost always be lower than other bonds with comparable maturities because they have the fewest risks.\n\nRelative yields—which may be discussed in terms of “spread” or difference in yield between a given bond and a “riskless” U.S. Treasury security with comparable maturity—vary with the type of bond, maturity date, the issuer and the economic cycle.\n\nCallable bonds are riskier than non-callable bonds, for example, and therefore offer a higher yield, particularly if the call date is soon and interest rates have declined since the bond was issued, making it more likely to be called.\n\nShort-term bonds with maturities of three years or less will usually have lower yields than long-term bonds with maturities of 10 years or more, which are more susceptible to interest rate risk. All bonds have more risk when interest rates are rising, but those with the lowest coupons stand to lose the most value.\n\nUnderstand the Risks Before You Invest\nBonds have a role to play in virtually every investor’s portfolio (See the article on Asset Allocation for more inf
964830
I assume, that an investor is investing in both stocks as well as bonds in emerging markets. The risk premia associated with stocks will change with varying interest rates. One way to reduce this risk is by diversifying your investment in stocks accross different countries. On the other hand, if one is investing only in bonds issued in emerging markets, one can take care to invest in a short duration bond portfolio so as to minimize interest rate risk.
106382
P/E is not related to interest rate.\n\nP/E is the ratio of price to earnings of a stock.\n\nPrice paid vs earnings for the last year.\n\nThe lower the P/E is, the better.  \nTo rate a stock only by P/E, you would want to compare it for all stocks in the field the company is in.  Of course P/E is only one of the many measurements to take into consideration when deciding to purchase a stock.
663165
If not exactly, yes they are interelated, reason being, that when Fed hikes interest rates people tend to put money in the local interest earning instruments because of low risks (Obviously) and Better&Assured returns (Due rise in interest rates) consequently the money flowing towards indian equity/capital markets, in pursuit of higher returns, gets diverted towards american money markets because of more security.\n\nThe above one is a general view, if we look in particular, the real effect comes from lowered consumption caused in the domestic markets of america, because people tend put more money in savings in pursuit of higher returns over period of time. \n\nThis fall in comsumption in the largest consumer market in the world may cause disturbances in other countries India and especially China (For whom america is the single largest for its cheap low quality goods, due openness of the  american markets) due to this corporates may take a blow and sensex falling down is just a reaction to it.\n\nI would like you to note that a hike in FED has a more Global effect than the hike in indian or any other countries rates. \n\nThis is one topic on which you can write & write & write as much as you can so i wont bore further but rather leave it to you to deduct the further consequences.
74824
From a supply point of view: Because of high interest rates less ventures are profitable so lower investments cause weaker economy.\n\nBut from a demand point of view a higher interest rate means higher demand.\n\nLike every market looking at the supply or the demand independantly cause many mistakes.\n\nToday du to GreenSPan Con-UN-Drun interest rates are low it simply means that there is an oversupply of savings in front of a glutt investments (future consumption).\n\nMy analysis is that it is due to the revenue distribution with a lot of maney in the hand of the wealthy lookung for investments and little in the hand of the poor looking for consumption.\n\nMy point of view is that long term interest rates are a function of Standard Deviation (Revenues) / (Mean of Revenues)