TOPIC • 4 CLAIMS
Interest Rates
The rate environment as the input that reprices every other asset.
HOWARD MARKS/
The four-decade tailwind that made leveraged strategies work has not merely stopped but reversed.
- a 40-year, 2,000-basis-point decline in rates from 1980 to 2020, 22¼% to 2¼%
- fed funds went from zero to 5¼-5½% starting in 2022
HOWARD MARKS/
He quantifies the tailwind that the prior four decades handed to anyone holding equities.
- S&P 500 rose from 102 in August 1982 to 4,796 at the start of 2022
- a compound annual return of 10.3%
HOWARD MARKS/
He uses a single borrower’s rate across his career to make the rate regime concrete rather than abstract.
- 22.25% in December 1980 falling to 2.25% fixed for 10 years — a 2,000-basis-point decline
HOWARD MARKS/
He isolates globalization as a disinflationary force that had begun to reverse.
- globalization reduced inflation by about 0.6% per year from 1995 to 2020
Claims are restated; figures are the authors' own. Each links to the document it came from, which in turn links to the original in full.