TINA, or "There Is No Alternative", was a term used by investors in the low-interest-rate environment to justify a sub-optimal portfolio allocation with an excessive weighting in equities. Since the earnings prospects of bonds were very low or, in the case of Switzerland, even negative, professional investors often had no other choice but to increase the risk and make a higher strategic equity allocation. This resulted in "TINA": equities continued to be bought despite high valuations because investors simply did not have a suitable alternative.
Debt has a price again
A 2-year US government bond is currently yielding 4.75% and – according to the current market assessment – the US key interest rate will peak at 5% in the second quarter of 2023. In Switzerland, the SNB brought an end to negative interest rates in September 2022; further interest rate hikes are set to follow. Debt has a price or interest rate again.
This also applies to equities
Various equity valuation models evaluate whether the excess returns of equities are sufficient compared to the risk-free interest rates at the respective volatility levels. As we experienced, compared to bonds, the volatility of equities remained at low levels, as can be seen in the chart.