Industrial Insight

Looks bad… | January 3, 2013

http://rpseawright.wordpress.com/2013/01/02/leading-investment-indicators-3/
January 2, 2013

Above the Market’s Leading Investment Indicators

As Warren Buffett has pointed out (although he is not alone in this), “interest rates act as gravity behaves in the physical world. At all times, in all markets, in all parts of the world, the tiniest change in rates changes the value of every financial asset. …If interest rates are, say, 13 percent, the present value of a dollar that you’re going to receive in the future from an investment is not nearly as high as the present value of a dollar if rates are 4 percent.” As charted below, long-term interest rates have been generally declining for more than 30 years and remain near record low levels, suggesting that all assets are at risk going forward.

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