Warren Buffett calls interest rates "gravity" for asset prices. There's a clean reason: a stock is worth the present value of its future cash flows, and you discount those with the interest rate. Raise the rate and the present value of distant profits shrinks — so, all else equal, higher rates push stock prices down.
Why growth stocks feel it most
A company whose profits are mostly far in the future (a high-growth name) has long "duration" — like a long bond, its price is very sensitive to rates. A steady, cash-now business is less sensitive. That's why rising rates in 2022 hit speculative tech far harder than boring value stocks.
The catch: the sign is not fixed
Here's what most takes get wrong. The stock-rate (and stock-bond) correlation is regime-dependent. For much of the 2000s-2010s, rates and stocks moved oppositely and bonds cushioned stock crashes. In 2022 that flipped: rates rose and stocks AND bonds fell together, because the driver was inflation, not growth. Early in a recovery, rising rates can even accompany rising stocks (growth is returning). Anyone who tells you "rates up means stocks down, always" is skipping the regime.
Why it matters here
The interest rate is the anchor every risk premium is measured against — it's literally the return on our Safe Yield strategy, and the "real" version drives Safe Real Yield. Understanding rate sensitivity (duration) is understanding half of why portfolios move.
Educational material — not investment advice.