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by gjm11
4160 days ago
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Valuations would go to infinity if both the following were true: (1) Interest rates are zero; (2) investing in a company brings an expectation of nonzero returns. (More precisely: returns sufficient to outweigh the risk that the company fails.) Unless everyone in the market is grossly irrational, 1 and 2 should not both remain true for long. If you can invest in FooCorp and make 1% per year (after adjusting for risk) then you will be happy to pay 0.5% per year to borrow money, and there will be people who will be happy to lend to you on those terms. |
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