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In this case, with interest rates near zero, it may be rational for markets to converge on prices that discount the transient effects of a pandemic recession.
by edouard-harris 6y ago
In this case, with interest rates near zero, it may be rational for markets to converge on prices that discount the transient effects of a pandemic recession.
- H8crilA 6y agoYup, exactly. Low yields increase the duration of equities. This also means that prices become more random (because who's to judge what will Google ads sales look like in 20 years? or what will the iDevice of the 2050 look like? with low enough yields things like these become more and more important).
- lotsofpulp 6y agoI don’t know what google’s ad sales or idevice will look like in 20 years, but I am betting the US government will do whatever it can to keep broad market equity index values rising.
- H8crilA 6y agoJust like the Chinese believe that the China government will keep their apartment prices high.
- lotsofpulp 6y agoMaybe, if all of China’s political leaders are invested in apartments.
- toomuchtodo 6y agoChina’s political leaders are invested in avoiding their version of the French Revolution.