‘Stop worrying about return on capital, start worrying about return of capital.’ – Mohamed El-Erian

ZeroHedge/Tyler Durden/11-18-2021

traffic sign warning of a tsunami hazard zone, showing individual about to be overcome by a very big wave“But investors need to respect that they’re riding a huge liquidity wave thanks to the Fed, and that wave will eventually break as monetary stimulus winds down. So investors should keep an eye on the risk of an abrupt shift from a relative valuation market mindset to an absolute valuation one, or an environment in which you stop worrying about the return on your capital and start worrying about the return of your capital. That’s a risk to watch because not only would it mean higher volatility, but also, and most critically, an undue hit to the real economy.

USAGOLD note: El-Erian’s warnings become more strident by the day ……

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