This story was originally published here.
When it comes to today's market… interest rates are what matter.
Heck, they're practically the only thing that matters, as I explained yesterday here in DailyWealth.
In that piece, I showed why today's low interest rates are creating incredible value in the housing market. Today, I'll focus on stocks.
The fact is that this interest-rate story is creating big value for stocks, too. It's happening despite the rally we've already seen since March. And that's not the only reason to get excited.
Let me explain…
The interest-rate story is what makes real estate cheaper than you can imagine… And the same is true for the stock market.
Think about it: You earn about 0% with your money in the bank. But stocks at a price-to-earnings (P/E) ratio of 20 (20-to-1) have an “earnings yield” (E/P) ratio of 5% (that's 1-to-20).
When you buy a stock at a P/E of 20, you are buying an earnings yield of 5%. Compare that to earning 0% in the bank… or 0.6% on a 10-year bond.
So as you can see, the earnings yield is a way to measure value while keeping interest rates in mind. And it shows that stocks are a great value right now.
Even if stocks doubled in price to a P/E of 40, then their earnings yield would be 2.5% – which is still pretty good relative to other investments these days.
Again, if you've been reading DailyWealth recently, you already know this. But there's even more to the story.
Regular readers know I like to buy what's cheap, hated, and in an uptrend…
Editor's Note: Click here to keep reading.
Gold Expert’s newest prediction could send $7 stock soaring
Dear Reader,
Something strange is happening in the financial system…
And according to the Wall Street Journal, it's causing some investors –- including the world's biggest banks – to move massive amounts of cash out of the banking system.
What exactly is going on and what does it mean for your money?
I recently met up with widely-followed hard asset expert Bill Shaw at his firm's east-coast headquarters.
Over the past two decades, Mr. Shaw's firm has grown from tiny startup into a publishing powerhouse – serving more than a million readers in more than 150 countries.
Since 1999, the firm owes its legendary status as a trusted source of financial research to its eerily-accurate track record of often-controversial financial predictions, including:
- The Dotcom Crash…
- The bankruptcy of General Motors…
- The real estate bubble…
- The fall of General Electric…
- And the bankruptcy of Freddie and Fannie.
Recently, Bill revealed a brand-new prediction that has caught many by surprise.
He explained, “I'm not the kind of guy who gives in to hype and big predictions… that's why I've waited nearly a decade — to make sure the timing is right for the biggest prediction of my career.“
He went on to explain that over the next few years, he sees massive bull market developing in a sector of the economy that, over the years, has been completely ignored by nearly every investor in America.
The hard-asset expert said:
“Events happening around the world are about to come together at just the right time to create a perfect storm, causing some of the world's biggest investors to dump cash and stocks – and pile into this long-hated asset.
In fact, it's already begun.”
After dedicating hours to painstaking examination, ensuring he considered every possible angle, Mr. Shaw has put together a free presentation to explain exactly what he sees coming… and the best way for Americans prepare.
Go here to see all the details.
Regards,
Brian Mansfield
Research Specialist, Stansberry Research
I should warn you – some may be surprised by Mr. Shaw's massive prediction. The fact is, even if he's only half right, the world's financial system could look very different in the next few years.
