Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

You can roughly calculate yield from a stock investment. If a stock has a P/E ratio of 20 (i.e. the value of all stocks issued is 20x its annual earnings), divide 72/20 to get a yield of 3.6%. If US government bonds offer 1% yield this stock looks like a deal, but when safer government bonds yield 4% this stock now looks unattractive.

Of course this is a gross oversimplification: earnings can grow, stocks can pay dividends, companies can go bankrupt, and companies have to pay their own bondholders as well as stockholders. But hopefully it shows that a tradeoff between stocks and bonds does exist.




Consider applying for YC's Fall 2025 batch! Applications are open till Aug 4

Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: