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Today at 09:49:18 AM |
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I think money doesn't stop circulating just because high interest, as long as incentives offered remain attractive, investors will play along. What change when interst rate higher are the level of return demanded by investors, the reduction in leverage, and the allocation of capital becoming far more selective. When interest rates skyrocket, what i will do as investor I will put my money on asset that give profit which can outweigh the current high cost of capital. Higer demanded return is mandatory. I wouldn't think about using debt for investment. I will not spread my investment carelessly, i will choose specific project , commodity or country which truly essential, with commensurate risk and have super profitability.
On war condition, scarcity of energy and foods are really happen and make profit in this sector surged, so because demanded returns is match with rise in commodity price, capital will continue to flow just become more selective. Some risk taker investor think war condition are perfect time to multiple their money. For vanguard and blackrock, money just flowing out of the blackrock portfolio (on paper) shifting towards physical assets controlled by Glencore merely because more fruitfull incentive. I always amaze with market that always finding a way and shortcut to keep informal money circulation flowing. Matter of fact money talking, as long as spreads from international trade (legal or black market) can create profit.
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