Leverage: The End of an Era: How the Market Got Here and Where it Will Go Next
Throughout much of the past bull market, it was the use of historically excessive leverage in a historically low interest rate environment that drove up prices to all-time highs and drove cap rates to all-time lows. As we’ve noticed this past year, during which losses for our heavily leveraged financial institutions have reached unheard of levels and continue to mount, leverage cuts both ways. When the bubble bursts, the same system that facilitated extraordinary heights yields depressing lows.