To: Chip McVickar who wrote (5812 ) 3/11/2002 9:37:16 AM From: John Pitera Respond to Hi Chip, Thanks for posting that article by Paul McCulley, I'd already seen where Greenspan is endorsing a Cyclically-Accelerating Profit Rate Of Inflation. that will "take-back" the pricing and margin discounts that corporations have been compelled to make The past few years.Ultimately, the composition of real investment in our economy will reflect--among other influences--the attitudes toward risk of those who own the financial claims against the capital stock . If savers become more risk-tolerant, financial risk premiums will decline. In response to these reduced penalties on risk, firms will eventually adjust the mix of their endeavors toward more speculative projects -but, importantly, presumably ones that also offer higher prospective rates of return on average , which more often than not translate into higher long-term average economic growth. forsaking more economic growth for a more stable, less stressful, economic environment . As a consequence, returns on common stocks over rolling twenty-year periods have almost always outpaced the returns on less risky securities.”
