GMO 2Q16 Letter – The Duration ConnectionVW Staff
GMO letter for the second quarter ended June 30, 2016; titled, "The Duration Connection."
GMO - The Duration Connection
Over the last six or seven years, most financial assets have done very well. The performance divide has not been between low-risk assets and high-risk assets or between liquid assets and illiquid assets, but between long-duration assets and short-duration assets. Long-duration assets such as stocks, bonds, real estate, and private equity have benefitted from a large fall in the discount rate associated with their cash flows, while short-duration assets have been hurt . . .
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