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I would want to read the articles you are referring to, so I could understand the context and the discussion better.  However, there is something that really sticks out about the two time periods that the article evidently refers to.  I believe 1900 was a period of low interest rates and low cost of capital--I'm remember a deflationary period in the late 1800's,,,,,,not personally remembering, -:)...   but I do personally remember the end of that period, being 1979, being a time of very high interest rates and cost of capital.  and the early '80's also being high rates, and then of course today we have low interest rates and cost of capital.  So the 1900--1979 period would start with low cost of capital and end with high cost of capital.  The second period of the early 80's to today would be the reverse--high cost of capital ending in low cost of capital.  Financial asset values are largely determined by Net Present Value formulas, as well as forecasts of future earnings streams.  So an investor in the 1900--1979 period would be hurt by this, and the investor in the second period would have been very much helped.  So directionally what your saying would make sense to me--and I couldn't guess the extent of the impact, but that could be correct.  High interest rate periods are not good for the holders of financial assets, and vice versa.  but the 1900--1979 period is so long that I'm sure those investments still overall did well, despite the headwinds.
by wchurchill on Mon Mar 26th, 2007 at 07:19:59 PM EST
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