{"id":11726,"date":"2015-04-21T22:50:05","date_gmt":"2015-04-22T02:50:05","guid":{"rendered":"http:\/\/goldstocksforex.com\/?p=11726"},"modified":"2015-04-21T22:50:05","modified_gmt":"2015-04-22T02:50:05","slug":"dearth-of-capital-investment","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2015\/04\/21\/dearth-of-capital-investment\/","title":{"rendered":"Dearth of capital investment"},"content":{"rendered":"

Interesting graph from RBA governor Glenn Stevens<\/a>.<\/p>\n

A striking feature of the global economy, according to World Bank and OECD data, is the low rate of capital investment spending by businesses. In fact, the rate of investment to GDP seems to have had a downward trend for a long time.<\/p>\n

One potential explanation is that there is a dearth of profitable investment opportunities. But another feature that catches one\u2019s eye is that, post-crisis, the earnings yield on listed companies seems to have remained where it has historically been for a long time, even as the return on safe assets has collapsed to be close to zero …..<\/p><\/blockquote>\n

\"US<\/p>\n

Perhaps this is partly explained by more sense of risk attached to future earnings, and\/or a lower expected growth rate of future earnings.<\/p>\n

Or it might be explained simply by stickiness in the sorts of \u201churdle rates\u201d that decision makers expect investments to clear. I cannot speak about US corporates, but this would seem to be consistent with the observation that we tend to hear from Australian liaison contacts that the hurdle rates of return that boards of directors apply to investment propositions have not shifted, despite the exceptionally low returns available on low-risk assets.<\/p><\/blockquote>\n

What this illustrates is the limits of monetary policy to restore economic growth. <\/p>\n

Such [monetary] policies are, then, working through the channels available to them to support demand. But these channels are financial in nature. They don\u2019t directly create demand in the way that, for example, government fiscal actions do……<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Interesting graph from RBA governor Glenn Stevens. A striking feature of the global economy, according to World Bank and OECD data, is the low rate of capital investment spending by businesses. In fact, the rate of investment to GDP seems to have had a downward trend for a long time. One potential explanation is that … <\/p>\n

Continue reading “Dearth of capital investment”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[40,6,57,34],"tags":[474,1160,2750],"class_list":["post-11726","post","type-post","status-publish","format-standard","hentry","category-australia-nz-countries-regions","category-fixed-income","category-stock-markets","category-us-canada-countries-regions","tag-bond-yields","tag-earnings-yields","tag-price-earnings-ratio"],"yoast_head":"\nDearth of capital investment - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Dearth of capital investment - the patient investor\" \/>\n<meta property=\"og:description\" content=\"Interesting graph from RBA governor Glenn Stevens. 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CAPE10 compares the current\u2026","rel":"","context":"In "Earnings & Dividends"","block_context":{"text":"Earnings & Dividends","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/investing\/earnings-dividends\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":48368,"url":"https:\/\/thepatientinvestor.com\/index.php\/2024\/02\/13\/small-caps-surge-while-commodities-fall\/","url_meta":{"origin":11726,"position":4},"title":"Small caps surge while commodities fall","author":"Colin Twiggs","date":"February 13, 2024","format":false,"excerpt":"The S&P 500 failed to make further progress after breaking 5000. Expect retracement to test the new support level. The Russell 2000 Small Caps ETF (IWM), however, broke resistance at 200 to signal a fresh advance. Trend Index troughs above zero have warned of buying pressure since early January. The\u2026","rel":"","context":"In "Banks & Interest Rates"","block_context":{"text":"Banks & Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"S&P 500","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2024\/2024-02-12-spx.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2024\/2024-02-12-spx.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2024\/2024-02-12-spx.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":17854,"url":"https:\/\/thepatientinvestor.com\/index.php\/2019\/02\/08\/price-earnings-versus-growth\/","url_meta":{"origin":11726,"position":5},"title":"Price-Earnings versus Growth","author":"Colin Twiggs","date":"February 8, 2019","format":false,"excerpt":"A comment at lunch today about high price-earnings multiples got me started on one of my favorite topics: investment returns. 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