Credit to Jim Grant, Editor of Grant’s Interest Rate Observer who for my buck (or $910) is second to none in delivering high quality investment commentary with style and wit.
Well functioning markets price assets at an appropriate level to compensate investors for the risk they are taking. When assets are priced too cheaply relative to the future cash flows they can produce, the valuation of those assets will increase- this is a bull market. When assets are priced too high relative to those future cash flows or too high to adequately compensate for the risk of loss, the valuation of those assets will contract– this is a bear market.
All assets invariably become overvalued (though usually at different times) at which point a Value Restoration Project is necessary and inevitable– driving down valuations until, as Grant puts it “prices will be not just interesting, but rather commandingly, and compellingly cheap.” It is from these levels that new bull markets are born again.
This blog is dedicated to offering insight into these bull markets, whether ongoing, or not yet born.
See my inaugral post on Secular Stock Market Cycles and Today’s Value Restoration Project.