저자: 미상 · 외국인
요약 보기
고금리 환경에서 투자 전략을 설명한다. 미국채 금리가 자산 가치평가의 기준(무위험수익률)이라 금리 상승기에는 주식·부동산 매력이 떨어진다. 워런 버핏 인용으로 거시 예측보다 개별 기업의 해자(경쟁우위)와 부채·이자비용 관리가 중요하다고 강조. 코카콜라·구글·카니발 사례 비교. 금리 인하 시 주식에 긍정적이라는 결론.
다듬은 글
Hello everyone, before we move on to the video . I've been posting a lot more content on Instagram lately. So, if you came there to stay, please do so. I am new.money.official. Hope to see you there. So perhaps the biggest challenge we face as stock market investors today is that we are investing in a period of high interest rates.
We haven't seen interest rates this high since around 2007. But because of this persistent inflation that we have seen since 2021 until now, the Federal Reserve has had no choice but to raise them. And that's obviously not good for us investors because the Fed is intentionally raising interest rates to try to slow the economy.
Now we make a profit when the business is doing well, not when it is deliberately being set back . So what should we do? Well, there's one person who invested in the high interest rate periods in the early 70s, early 80s, 1989, 2000, and the last time interest rates were as high as they are now, which, as I said, was 2007.
And that person is Warren Buffett. And you know, I heard he did pretty well , all things considered. So I want to be very specific in this video and talk about real strategies that investors can use to invest smartly during a time when interest rates are still quite high. Interest rates are essentially to asset value what gravity is to value.
If I could reduce gravity by about 80%, I would jump in the Tokyo Olympics. Warren Buffett has always said that interest rates are the number one macroeconomic factor affecting asset valuations. And this is actually thanks to government bonds . Because the US is the world's number one economy and has reserve currency status, the return that investors can earn on US Treasury bonds is colloquially referred to as the risk-free rate .
Personally, I don't really like this terminology in investing, because , as we know, risk always exists. But in the case of US Treasury bonds, you need the United States to default in order to not get your yield. And in financial circles, because the risk behind these bonds is extremely low, they become the yardstick by which everything else is measured.
You know, if you can get a Treasury bond at 1%, you're more likely to invest your money elsewhere, whereas a Treasury bond at 10% is a much more attractive proposition. When the Federal Reserve raises interest rates, which they have been doing since March 2022, the yield you get from government bonds really goes up.
If we look at the federal funds rate and compare it to, say, the yield on two-year Treasury bonds, we see that when interest rates are higher, bond yields rise. In other words, investors get better returns from buying bonds. And this is obviously important to consider when considering investing in alternative asset classes, such as stocks or perhaps real estate.
You know, if we go back, for example, to 1981, 10- year U.S. Treasury bonds were paying a yield of about 15% . Now, under these circumstances, if you are considering buying another asset, such as rental property , you need to be sure that your investment will earn you at least 15% return each year for this investment to be worthwhile at all .
If that doesn't give you that, you're better off just holding low-risk U.S. Treasury bonds. And the same concept applies to stocks. If a company isn't going to grow very well and maintain that for at least the life of the bond, then for many investors it's simply not worth the risk. This is Warren Buffett explaining this very concept.
In 1982 or 1983, when the yield on long-term government bonds reached 15%, a company that was earning 15% on shares worth no more than book value under those circumstances, because you could buy a 30-year series of bonds and guarantee yourself 15% per year, and a business that was earning 12% was then of poor quality.
But a business that earns 12% when government bonds are 3% is an incredibly good business right now, and that's why they're selling at very high prices. So, there is a direct correlation between asset valuation and the risk-free rate on US Treasury bonds. And this brings us to a discussion of what is happening in modern times.
Well, when the pandemic first started in 2020, interest rates were cut to virtually zero, and you can see that bond yields also fell to virtually zero. This made stocks popular, but now, with inflation running high, the Federal Reserve has had to raise the federal funds rate to about 5 1/2%. And as you can see, the current yield on 2- year Treasury bonds is a respectable 4 1/2%.
This significantly exceeds the returns observed, say, in 2020. And, as Warren Buffett just explained, because this Treasury yield is the yardstick by which all other cash-flowing assets are measured, it means that in higher interest rate environments like today, other assets like stocks or real estate don't look as attractive as they once did.
So, there was an incredible shift in the appreciation of everything. The question now is what do we do? We are in an interesting position now. Interest rates are 5 1/2%. Government bonds offer decent returns, but one would imagine that most well- run businesses should be able to earn better returns over time.
It's a strange happy medium where conditions aren't the best for stocks, but also not the best returns for bonds. So what are we to do in this strange golden mean, and how does someone like Warren Buffett approach the problem of where to invest his money? Well , that's his philosophy. If we thought we knew what the dollar or interest rates would do, we simply wouldn't do it, but we would participate in transactions involving these commodities, actually futures, uh, directly.
We always try to focus on what is knowable and what is important. What can be learned and what is important about Coca-Cola is that more and more people will consume soft drinks around the world, and do so year after year, and Coca-Cola will grow, and that the product is extremely inexpensive compared to the pleasure it brings people.
So that's what we focus on, and interest rates and exchange rates, as important as they are in the short term, won't really determine whether we get rich over time. While in the short term, interest rate fluctuations do affect the market, in the long term, if you are buying individual businesses, ultimately it is the fundamentals of the business that will determine the success of the stock.
For example, we can focus on Coca-Cola and look at its performance during the 70s and 80s. During this time, the economy experienced sharp fluctuations in both inflation and interest rates. However, if you look at Coca-Cola's net income over 20 years, you see something much more stable . No matter what was happening in the economy as a whole, no matter what the Federal Reserve did with interest rates, people still drank more Coca-Cola.
And if you look at the stock price line over a 20- year period, you can see that the stock went from 82 cents to about $4.30. While there have been some periods of increasing volatility, ultimately, in the long run, the stock price always reflects the company's performance, not macroeconomic conditions.
But, to be fair, I'm a little picky about the example of Coca-Cola, a company that, in retrospect, we all know, has done very well , because there's a perfectly valid argument that rising interest rates do put a financial strain on the company. For example, rising interest rates constrain the consumer, meaning they have less money to spend.
Thus, the business earns less money, and in addition, it makes it more difficult to service the debt , as interest costs will increase as the debts are rolled over. So when we look at companies on a case-by-case basis , as Warren Buffett suggests, what exactly can we check to help a business do well in whatever macroeconomic conditions it may find itself in?
Well, the first thing to look at is the competitive advantage or moat. Warren Buffett once said, and I quote: "In business, I look for economic castles protected by impregnable moats." And that's because just as a moat protects a castle from intruders, the company we invested in will be protected from intruders by its competitive advantage.
For example, although Coca-Cola performed well during the period we described earlier, the main reason for this is that it had an unbeatable brand . Even today, the Coca-Cola brand remains resilient, so much so that in blind tastings, people prefer Pepsi but buy Coca-Cola more often . This brand has always protected the company's sales and growth, and it maintains the business as the number one sparkling water to this day.
The brand's moat can also be seen in companies such as Louis Vuitton, Ferrari, or Nike. You know, there are switchable moats that keep customers in a certain ecosystem. There are moats preventing entry that hold back companies like Boeing, Airbus, Carnival, Royal Caribbean. There is a monopoly moat held by companies like Google in internet search, or Luxottica in sunglasses.
Therefore, finding a business with a moat is very important when interest rates are high. After all, they are less likely to experience a revenue slowdown due to a weak consumer, and if the moat is strong enough to give them pricing power, if times get tough, they can usually still raise prices by a certain percentage to help their business.
So, moats are truly the secret sauce for dealing with the most painful macroeconomic conditions. But beyond that, another thing to be especially mindful of in times of high interest rates is debt, and more importantly, interest expense. Since many companies simply restructure their debts as they mature , it is important to understand when their various debts mature, how interest rate costs will be affected over time , and whether they will be able to pay them.
For example, if you look at a business like Google, for the 3 months ending March 31, 2024, they had $94 million in interest payable, but they generated $23.7 billion in net income and over $24 billion in cash sitting on the sidelines. I mean, interest rates can be anything. From that perspective, it wouldn't really have a significant impact on Google.
Now look at another business with a moat, but in a completely different situation, Carnival Cruises. They were supposed to pay $471 million in interest due for the 3 months ending February 29, 2024, and they only received $276 million in total for the quarter. So, after accounting for interest, they lost money for the quarter.
For comparison, if you look at the last quarter before the pandemic, their interest expense was only 49 million, and their net income was 423 million . So it's interesting to see how this business is suffering now after having to take on huge debts due to the pandemic, and how it's paying more interest due to higher rates today.
Sure, they only had $518 million in cash on their balance sheet in 2019 compared to $ 2.2 billion now, but you can still clearly see the impact of higher debt and rising interest rates on their interest expense in 2024. So, as Warren says, it's important to focus on the individual business rather than the broader macroeconomic landscape.
And in my opinion, checking for a moat and monitoring a company's debt management can be very helpful, especially in times when interest rates are higher. Also, if you want to learn more about this kind of analysis from Warren Buffett, please check out “Introduction to Stock Analysis” on the New Money Education website.
I'll leave a link in a pinned comment on this video. This is a 6-hour video course that will take you step-by-step through a company's financial statements, all the tests you need to pass, and three valuation methods that will help you calculate the intrinsic value of different businesses. So if you might like this, use the code save50 and you can get $50 off too .
We've received some really great feedback about this course, so I'd highly recommend you read some of the recommendations. But, with that said, I have one more excerpt for you guys to wrap up the video, and it will hopefully really drive home the idea that while interest rates may be high and business in general is tougher, don't let that deter you from investing.
The best time to buy stocks in recent years, you know, was when interest rates were skyrocketing, and it seemed very safe to put money in Treasury bonds at four, in fact the prime rate had risen to 21 1/2%. But you could, you could invest money at huge rates in the early 80s. As tempting as it may seem, it was completely wrong.
It was better to buy stocks at that time because when interest rates changed, their value changed even more. And this is very important to remember. When interest rates finally come down, it's a really good sign for the stock market. So, even if some companies that didn't make the Magnificent Seven, but some companies in the market have fallen a little, if it's a solid business, then buying stocks during high interest rates at low valuations can definitely be an advantage when the shackles are lifted and rates are lowered.
Remember, when the risk-free rate falls, stocks look even juicier, and money tends to come in. But overall, guys, I hope this was an interesting look at investing in a time of high interest rates. Please like the video if you enjoyed it. And with that in mind, see you in the next video.
Comments 0