Too much capital

Fascinating essay by William J Bernstein...

During the dot-com mania of the late 1990s, the cost of capital came perilously close to zero, and now at the cusp of the twenty-first century, it is low indeed. As I write, modest single-digit real expected rates of return blanket the asset-class universe while investors frantically shuttle capital among stocks, real estate, venture capital, hedge vehicles, timber land, commodities futures, petroleum companies, and precious metals in a desperate attempt to escape the perverse entropy of frictionless intermediation on a wealthy planet... How to understand it all?

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