Interest rates are soaring! How to act now?
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The original article can be found here, written by Mikael Hellberg, CEO and founder of Aktieutbildning.nu. Mikael Hellberg has over 35 years of experience, and Vikingen has been working with technical analysis and investments for 40 years and is constantly evolving!
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The interest rates in the U.S. have recently climbed above 5 percent!
Many investors are now starting to get seriously worried. Are these concerns about interest rates justified, or do they actually create opportunities for the well-informed? Let’s see what 70 years of stock market history tells us—and how we should best position ourselves now.
Rapid changes in the financial markets always create uncertainty. Recently, we have seen capital begin to shift as interest rates rise and the AI investment boom has slowed down.
In “Börssnack,” we have been talking a lot about how we are heading into an environment of higher interest rates. Please feel free to check out our recorded webinars in the archive.
Or join us on Wednesday! 👉 Sign up for the next Börssnack webinar. We’ll dive into the current stock market scenario, update our interest rate scenarios, and show you how to best act right now.
Rising interest rates can be a sign of strength!
So why are long-term interest rates rising? Often, this is a sign of strength driven by an emerging economic upswing, rising corporate profits, and upwardly revised forecasts!
The opposite scenario is more troubling: a situation where long-term interest rates are falling while central banks are raising key interest rates. In that case, the bond market is signalling an impending recession. That is not where we are today.
What do 70 years of stock market history tell us?
To succeed in the stock market, we need to look beyond the short-term noise. A statistical analysis of 70 years of monthly data for the U.S. S&P 500 and the 10-year Treasury bond reveals a clear pattern:
The correlation between fluctuations in market interest rates and stock market performance over the coming year is surprisingly weak.
In more than 7 out of 10 cases, the stock market has generated a positive return over 12 months—regardless of whether market interest rates have risen or fallen.
Even in the event of an extreme interest rate shock (where the interest rate surges by more than one percentage point in just three months), the stock market has historically delivered positive returns the following year, although the average return then drops from the normal 9–10% to about 5%.
Conclusion? Corporate earnings growth is a much stronger driver of the stock market than interest rates are a drag. Declines of 10–15 percent are completely normal and, when the earnings trend is pointing upward, it should be viewed as a buy opportunitity.
Here’s how to navigate the interest rates in practice!
Interest rates matter, but they shouldn’t drive you to panic sell. Instead, it’s about building a robust portfolio that can withstand—and even benefit from—the macroeconomic climate.
You can find a concrete example of how we put this into practice in Aktieutbildning.nu’s own stock portfolio.
We recognized early on that interest rates were on the rise, and have therefore held large positions in Global Stars. This position, in turn, has been heavily weighted toward the banking sector—an industry known for generating substantial profits when interest rate margins widen. By understanding the macroeconomic landscape, we can position ourselves correctly in advance.
Do you want to stop guessing and start investing with a clear plan? Then we have the right tools for you, no matter where you are on your investment journey! Here are a few examples:
👉 Download the free e-book “The Stock Market Chatter Strategy”
👉 Read more and sign up for the Introductory Course: The Basics of a Good Stock Market Strategy
Good luck with your investments— and see you in “Börssnack”!
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Yours sincerely
