Low interest rates have incentivised borrowing in recent years. There has been little reason for companies to reduce their debt levels. Therefore, businesses in a range of sectors have leveraged up their balance sheets in order to improve shareholder returns. This has helped to boost profits and generated higher returns for investors.
However, a more hawkish monetary policy stance in the US and the threat of higher inflation across the globe mean higher levels of debt repayment could become a reality. A stronger dollar may also cause the cost of servicing debt to rise, meaning balance sheets must be deleveraged. This process may be unpopular among investors on the whole, since cash which could have been used for investment or for dividends may now be used to repay debt.
by Zak Mir | Trading| 1 mins. to read For the first time, journalists from alternative media will play an active part in the UK's largest event for private investors.
by Evil Knievil | Evil Diaries| 1 mins. to read Law in practice: I was surprised to learn that a major plc could have a memorandum and articles of association which allowed, at least on the face of it, a resolution put to shareholders of one class to be opposed simply on the basis of one vote per shareholder rather than one vote per share.
by Zak Mir | Trading | 1 mins. to read While it may be the case that Uru Metals (LON:URU) shares are somewhat "over followed" at the moment, this doesn't mean we don't have decent charting material on our hands.
by Nick Sudbury | Funds | 5 mins. to read We all know that we should aim for a well-diversified portfolio, but that is easier said than done given the high correlations between most of the main asset classes.
Material contained within Master Investor Magazine and its website is for general information purposes only and is not intended to be relied upon by individual readers in making (or refraining from making) any specific investment decisions. Master Investor Ltd. does not accept any liability for any losses suffered by any user as a result or any such descision.
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