Eric Siu explains how years of low interest rates pushed investors to chase risky, equity-like returns around 7-8% because safe options paid almost nothing. Now that rates are rising, that behavior is starting to shift.
We've lived in an environment of really low interest rates for a long time. When you have really low interest rates, it creates bad behaviors. We've been stimulating for too long. People used to just invest in equities, which are stocks, right? You can now find equity-like returns, which is like 7 to 8% a year. There's a sea change now where interest rates will go back up and we're going to see different types of investing mentalities or styles.
