Discounting

Of late, every time interest rates tick down, growth stocks, as exemplified by the NASDAQ average, reliably bounce up …. because a lower interest rate equates to a lower discount rate … meaning one is willing to pay more for the future earnings stream of these stocks … resulting in higher prices.

However Pilgrim, the liklihood that today’s interest rate is going to last that long is zero … so the stock market, in this case, seems rather naive. No?

Shouldn’t the NASDAQ be discounting the future discount rate?

STAND UP FOR DISCOUNTING!