Difficult. It's mainly a game of interest rate cuts. Prices will certainly rise for the time being, but how are these companies positioned in the long term and what are their future prospects?
In Germany in particular, I see many hurdles due to regulations and politics in general. New construction is also expensive in Germany and is set to become even more expensive.
All of the companies you mentioned have shown that their business model works in times of minimal interest rates, but have also shown weaknesses when interest rates have risen to a historically halfway normal level. It became clear that these are not just valuation discounts due to high interest rates when all of the companies mentioned had to cut their dividends sharply or even suspend them.
In Germany in particular, I see many hurdles due to regulations and politics in general. New construction is also expensive in Germany and is set to become even more expensive.
All of the companies you mentioned have shown that their business model works in times of minimal interest rates, but have also shown weaknesses when interest rates have risen to a historically halfway normal level. It became clear that these are not just valuation discounts due to high interest rates when all of the companies mentioned had to cut their dividends sharply or even suspend them.
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@RealMichaelScott I don't think the business model will change. There will simply be slower growth than back then with the 0% interest rate policy. Nonetheless, shares will gain immensely in value if interest rates are cut, and prices will rise as a result.
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@Roman_moed The question is whether they can grow faster than their capital costs in the long term.
If they can increase sales by 5%, but pay 8% interest on their bonds, they only end up destroying capital 🤷♂️
If they can increase sales by 5%, but pay 8% interest on their bonds, they only end up destroying capital 🤷♂️
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