Tech-related stocks, as long-duration assets, are hit by rising interest rates more than shorter-duration assets.
Mixed Partly true and partly false in roughly equal measure.
Factual: Statements about the present or the past, checked against the record: did they hold up?
What would count as true or false
True: standard finance theory (equity duration and discounted cash flow) and empirical evidence (for example tech and growth stocks against value or shorter-duration assets in rising-rate periods such as 2022) consistently show that tech-related, long-duration equities fall more when interest rates rise. Mostly true: the general relationship is well supported, with some caveats or exceptions. Mixed: the evidence is roughly split. Mostly false: the idea is widely stated but empirical research finds the link weak or inconsistent, for example studies disputing that growth stocks have meaningfully longer equity duration. False: the evidence shows tech or long-duration equities are not more sensitive to rising rates.
Set before the research began.
Evidence (4)
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E1 FT Wilshire 5000 mid-year review: Perspectives on the correction | Wilshire Wilshire · 5 July 2022
“A key feature of the sell off was the rotation out of long duration growth and tech stocks in response to rising real yields.”
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E2 Have we become too used to low rates? | Lombard Odier Lombard Odier Investment Managers · 18 October 2022
“Similar to bonds, equities pay cash flows in the future, so their valuation should move inversely to changes in interest rates, which serve to discount future cash flows.”
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E3 THE DURATION OF VALUE AND GROWTH - GMO GMO · March 2021
“While their duration is slightly longer than the market's, it is not much longer, because no growth stock remains a growth stock forever.”
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E4 THE DURATION OF VALUE AND GROWTH - GMO GMO · March 2021
“But as it turns out, there is little truth to the argument that a value-driven equity portfolio is a materially shorter duration investment than a growth-driven one.”
Reasoning
E1 supports the claim: it describes the 2022 sell-off as a rotation out of long-duration growth and tech stocks as real yields rose. E2 sets out the discounted-cash-flow reasoning that equity values move inversely to rates. E3 and E4, from a GMO white paper, argue that growth stocks' duration is only slightly longer than the market's and that value is not materially shorter in duration. This is the kind of disputing research the criteria name, so the evidence is roughly split.
Cite this claim
Nouriel Roubini, “Tech-related stocks, as long-duration assets, are hit by rising interest rates more than shorter-duration assets.” (said 3 January 2023). Verdict: mixed. Reliability API, claim c_9a7accc5803b, method 0.1.0+c876030c, dataset release v1.1.2. https://epistacklabs.com/claims/c_9a7accc5803b
This claim is in dataset release v1.1.2, with the same verdict.
Reply to this claim
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Verdicts are made automatically; how verdicts are made.