Your takeaway of a rising price environment for real assets despite nominal increases in interest rates forthcoming reminds me of Dr. Linneman's Fall 2020 newsletter (you can see it here https://getrefm.com/if-interest-rates-determine-cap-rates-where-is-the-evidence/ ) that the conventional wisdom of real asset cap rates following interest rates (i.e. rising interest rates = rising cap rates = lower real asset prices) is wholly wrong, and all that really matters is allocations of capital. It is a thorough empirical study which supports your general thesis of upcoming rising real asset prices and, more importantly, highlights that when large changes in capital allocation are occurring, things such as minor increases in interest rates or unemployment are almost meaningless.
Thank you for the newsletter and looking forward to the upcoming sector-specific insight!
Dr. Rutledge,
Your takeaway of a rising price environment for real assets despite nominal increases in interest rates forthcoming reminds me of Dr. Linneman's Fall 2020 newsletter (you can see it here https://getrefm.com/if-interest-rates-determine-cap-rates-where-is-the-evidence/ ) that the conventional wisdom of real asset cap rates following interest rates (i.e. rising interest rates = rising cap rates = lower real asset prices) is wholly wrong, and all that really matters is allocations of capital. It is a thorough empirical study which supports your general thesis of upcoming rising real asset prices and, more importantly, highlights that when large changes in capital allocation are occurring, things such as minor increases in interest rates or unemployment are almost meaningless.
Thank you for the newsletter and looking forward to the upcoming sector-specific insight!
Dylan