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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "One of the main concerns is whether rising rates will make it less attractive for companies to buy back their own shares, which traditionally increases the price of shares by reducing the number of shares outstanding."data-reactid =" 23 ">One of the main concerns is whether rising rates will make it less attractive for companies to buy back their own shares, which traditionally increases the price of shares by reducing the number of shares outstanding.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Higher interest rates make cash a more attractive asset class due to the higher rates applied to bank accounts and certificates of deposit."data-reactid =" 24 ">Higher interest rates make cash a more attractive asset class due to the higher rates applied to bank accounts and certificates of deposit.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""We expect the S & P 500 to deliver a modest-to-all absolute return in 2019. The risk-adjusted return will be less than half of the long-term average," Goldman Sachs analysts wrote in a note to investors. customers. "The species will represent a competitive asset class for stocks for the first time in many years.""data-reactid =" 25 ">"We expect the S & P 500 to deliver a modest-to-all absolute return in 2019. The risk-adjusted return will be less than half of the long-term average," Goldman Sachs analysts wrote in a note to investors. customers. "The species will represent a competitive asset class for stocks for the first time in many years."
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If companies can earn a decent return by keeping only cash on their balance sheets, they can buy back fewer shares, which could dampen the powerful driver of stock market gains in recent years."data-reactid =" 26 ">If companies can earn a decent return by keeping only cash on their balance sheets, they can buy back fewer shares, which could dampen the powerful driver of stock market gains in recent years.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "But do not worry, said market strategist Kevin Kelly, CEO of Benchmark Investments."data-reactid =" 27 ">But do not worry, said market strategist Kevin Kelly, CEO of Benchmark Investments.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""I do not think investors need to worry about interest rates affecting share buybacks," Kelly said. "Interest rates are still historically low.""data-reactid =" 28 ">"I do not think investors need to worry about interest rates affecting share buybacks," Kelly said. "Interest rates are still historically low."
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Kelly believes incentive to buy shares will not be dampened by rising interest rates, but by investor pressure to boost corporate profit margins – a major concern as analysts start ringing the alarm on the "record profits"."data-reactid =" 29 ">Kelly believes incentive to buy shares will not be dampened by rising interest rates, but by investor pressure to boost corporate profit margins – a major concern as analysts start ringing the alarm on the "record profits".
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""The repurchase of shares will not increase the margins of a company," Kelly said. "The increase in capital expenditures and investment in commercial activities will result."data-reactid =" 30 ">"The repurchase of shares will not increase the margins of a company," Kelly said. "The increase in capital expenditures and investment in commercial activities will result.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Kelly points to Home Depot (HD), who invests $ 1.2 billion in its supply chain."data-reactid =" 31 ">Kelly points to Home Depot (HD), who invests $ 1.2 billion in its supply chain.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""It's better to spend $ 1.2 billion than buying back shares," he said. "CFOs review their balance sheets and decide where to get the best return on their money. Reinvesting in the business can be profitable for many quarters and years. ""data-reactid =" 32 ">"It's better to spend $ 1.2 billion than buying back shares," he said. "CFOs review their balance sheets and decide where to get the best return on their money. Reinvesting in the business can be profitable for many quarters and years. "
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The impact of rising interest rates may have more impact on the decisions of individual investors than companies, Kelly said."data-reactid =" 33 ">The impact of rising interest rates may have more impact on the decisions of individual investors than companies, Kelly said.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""If you are an investor with a dividend yield of only 1%, you can put your money in a short-term T-note with a return of 2.75% – especially among the price and interest rate concerns. other concerns of equity investors, "noted Kelly."data-reactid =" 34 ">"If you are an investor with a dividend yield of only 1%, you can put your money in a short-term T-note with a return of 2.75% – especially among the price and interest rate concerns. other concerns of equity investors, "noted Kelly.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Scott Gamm is a Yahoo Finance journalist. Follow him on Twitter @ScottGamm. "data-reactid =" 35 ">Scott Gamm is a Yahoo Finance journalist. Follow him on Twitter @ScottGamm.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedInand reddit."data-reactid =" 36 ">Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedInand reddit.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "More from Scott:"data-reactid =" 37 ">More from Scott:
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "It will be difficult for the shares to rally in 2019 without technology – but not impossible"data-reactid =" 38 ">It will be difficult for the shares to rally in 2019 without technology – but not impossible
These 2 forces could encourage companies to reduce their capital expenditures
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The gathering of "Santa Claus" could arrive earlier this year"data-reactid =" 40 ">The gathering of "Santa Claus" could arrive earlier this year
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