Do Rising Rates Mean Falling Stocks?

Do Rising Rates Mean Falling Stocks? by Brad McMillan, Commonwealth Financial Network

Yesterday, I saw an interesting doom-and-gloom piece on rising rates, which claimed that rate increases typically sink the stock market and that we could potentially expect a crash in the near future.

Theoretically, this isn’t crazy; higher rates should lead to lower stock prices. In practice, though, higher rates typically reflect a strengthening economy. The effect on stock prices is a battle between the tailwind of faster earnings growth from an improving economy and the headwind of higher rates. Only in the absence of the tailwind does the headwind become significant.

There are real problems with rising rates, principally in emerging markets that have borrowed extensively in dollars,...