Gurley: Near-zero interest rates break DCF models and drive market speculation
Bill Gurley · 20VC: Bill Gurley and Howard Marks: What Happened In 2020? What Can We Expect Looking Forward to 2021? · Jan 4, 2021 · at 5:42
Bill Gurley, general partner at Benchmark, discusses how ultra-low global interest rates distort valuation models and incentivize speculative risk-taking across asset classes.
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“Clearly the one thing that's different from the past 102 hundred years are near zero interest rates, maybe below zero real rates across the globe, and, you know, technically your DCF model just Blows up. It doesn't work, right? It doesn't solve. And at the very least, it encourages massive speculation as people search for asset categories for yield. And I think we're seeing that. I think we're seeing quite a bit of speculation.”
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