In our mid-year letter to investors, we explained that weird stuff happens when rates fall below zero. The bottom line, while difficult to swallow, is that the bar has been lowered. Investors should shift their expectations accordingly.
We illustrated what that new, lower bar looks like in a recent presentation titled, A Dangerous Mindset. Take a good look at page eleven. When we stumbled across it late one evening, Lewis Carroll’s nonsense world suddenly made sense.
Okay, maybe that’s a stretch. But this chart was an eye-opener, to say the least. It clearly illustrates the impact of nonsense rates on stock prices.
I hope to go into far more detail on this particular example in a future piece. That said, I’m aware of my increasing tendency toward distraction. So sharing a few slides now, before losing focus, seemed like a good idea. Ooooh, look a dinosaur.