Equity duration
InvestingDefinition
A measure of how sensitive a stock's value is to interest rate changes — borrowed from bond math. Long-duration stocks (high P/E growth names with most cash flow far in the future) react sharply to rate changes; short-duration stocks (high dividend yields, near-term cash flow) react less.
2022 was a vivid demonstration: ARKK (long-duration) lost 70%+; XLE (short-duration) gained 50%+. Same broad market, opposite outcomes driven by duration.
2022 was a vivid demonstration: ARKK (long-duration) lost 70%+; XLE (short-duration) gained 50%+. Same broad market, opposite outcomes driven by duration.