“Profits are higher – in no small part because the Fed’s ZIRP has made it possible to borrow cheaply. Companies used the cheap credit to do two important things:  1) Refinance expensive debt, lowering interest expenses and thereby pushing up net profit margins;  2) Buy back their own shares, raising their share prices.  It’s not likely they’ll be able to repeat the trick in 2014. Because interest rates are moving up.  If you can earn 3% on “risk free” Treasurys… does it make sense to buy overvalued stocks? Real estate? Andy Warhol doodles?  Will any investment do better than 3%? Is the extra risk worth the extra reward?”

http://www.bonnerandpartners.com/this-unexpected-event-will-cut-the-sp-500-in-half/

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