Nobody Wants Cash Flow

Nobody wants cash flow when money costs nothing.

This is playing out right now in consumer staples stocks, which, according to Sentimentrader, have shrunk below 6% of the S&P 500 for only the 2nd time in 30 years. I’ll give you one guess as to when that other time was. Yep, you nailed it.

There are 26 detergent and toilet paper stocks with a market cap north of $10 billion that have a higher yield than the 10-year treasury.

What would you rather own for the next ten years? A security that promises to pay your principal back with interest payments that are currently running behind inflation, or Walmart, a company that has raised its dividend for 48 straight years?

I know there are more than two things to invest in, but, and call me crazy, I do think that ultra-low interest rates impact the way people allocate their capital. Right now, money is free and cash flows are worthless.

We got into this and a lot more on tonight’s What Are Your Thoughts?