I've been busy of late. Here is a list of things I read/listened to this week. With the rising interest rates, it's all about risk!
1) From the Financial Times' Unhedged podcast.
The impact of rising rates on bond markets and also speculating on the ways the bond market turmoil can affect the stock market
Economic Slowdown and Reduced Corporate Profits
Higher rates act as a brake on economic demand. As spending and overall activity cool down, company earnings decline, which in turn drives stock prices down.
Asset Reallocation (Competition from Bonds)
When yields on safe, fixed-income assets rise, bonds become far more attractive compared to riskier equities. Investors choose to rotate capital out of stocks and into bonds to lock in decent, low-risk returns.
Forced Selling and Market Contagion (Financial Accidents)
Rapid interest rate spikes can catch leveraged players (like hedge funds) off guard, resulting in large losses. To cover these losses and meet liquidity needs, funds are often forced to sell off assets in unrelated markets—including equities—causing sudden, widespread drops across the stock market
On the back of Campbell's decision to slash dividends, things to remember about dividend payouts.
No dividend streak is safe and some flags to look out for that a dividend streak may be under threat.
- Free cashflow vs dividend payout ratio as a means to gauge if a dividend is sustainable. Earnings per share is not a great measure.
- Growing debt load and upcoming debt maturities, may signal a need to cut dividend
- Companies that have decades long streaks of dividend raises, raises it by a tiny amount, just to keep the streak going.
Ironically, a dividend cut might be prudent, if it is used to reduce debt for example.
3) Hedging stocks with.... other stocks?
A Financial Times Alphaville article highlighting a recent Goldman Sachs report, pointing out that roughly 50% of US large cap stocks have a negative beta. Meaning when the market moves up, they move in the opposite direction.
Great news, if you have diversified portfolio. You can hedge market exposure with the right stocks.
Lastly, in case you are getting worried about the stock market, remember the power of compounding. From Duncan Lamont at Bluesky, guess the stock that turned 100 dollars invested at IPO, into 1.6million today.
FridayChartQuiz: $100 invested in me when I joined S&P 500 would now be worth $75,000 vs $6,500 for SP500 Who am I? Clue: 🇺🇸 cultural icon Even wilder since 1981 IPO: $100 = $1.6m vs $20k from SP500 Log scale shown so can see diff in growth rates * NOT INV ADVICE, Past perf not guide to future*
— Duncan Lamont (@duncanlamont2.bsky.social) September 25, 2026 at 4:07 PM
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