Monday, May 4, 2015

On the low interest rates by Buffett (and gang)

What is said here is very true. With the low interest rates scenario, I am just wondering of where would people put their money. Bank's deposits is not a good option. People that have additional funds will have dilemma. This is also why we have seen generally prices of properties doubled (in many cases) over the last 5 years.

Anyone that says that the prices of equities are expensive due to past experiences may not look at today's perspective. Average interest rates 50 years ago may be much higher than the next 50 years. Japan had almost zero interest for the past 20 years. Janet Yellen has problem hiking up rates as other countries are asking her to delay the plan.

Another one below:

If Euro, Japan and China are going to continue to loosen their monetary policies (print more money), I am just wondering where do the additional liquidity goes to. People who have the ability to borrow are just borrowing to do what? Invest. Hence, there are probably more funds that goes into various assets - and those includes stocks.

5/5/15 - To prove a point, Australia's reserve bank just reduced interest rates to 2% - look at the rates during the 90s. Could anyone remember when we hear of even Malaysians putting money in AUD where they were getting more than 12%-13% interests?

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