High economic rent corresponds to low risk premium. Utilities are a great example, they trade almost like bonds (not quite; there's still risk in them, just loo

High economic rent corresponds to low risk premium. Utilities are a great example, they trade almost like bonds (not quite; there's still risk in them, just look at the famous Californian one). Also, "high rents = low risk premium" is the whole idea behind Buffett's moats. He correctly anticipated that risk premiums were far too high for businesses with durable competitive advantage (like coca cola), so he kept buying them even at "high prices", i.e. at apparently "dangerously low risk premiums". And then the premiums eroded even further as the companies proved resilient to competition. That's why, I think, he keeps buying Apple stock despite it being priced so dearly. The problem begins when you assign a ridiculously low risk premium to something that's so obviously risky, like the recent Silicon Valley "tech" startups, which have no moats, no profits, no margins, tons of competition. But the issue goes well beyond Silicon Valley.