I invest 100% in equities. I have no plans to change this, even in retirement (still years away). Both theory and empirical evidence indicates that, over a reasonably long time horizon, equities provide a much better rate of return than bonds or, heaven forbid, CDs. So my question is, what would happen to the economy if all savers had a risk tolerance for equities? Set aside the transition effects, obviously it would be disruptive if it happened overnight. But assume over the course of a generation, everyone wises up and develops the risk tolerance for equities. What would happen?
1. Would return on equities go down, since more capital is available?
2. Would economies become more productive, since middlemen are being cut out, and risk capital is available?
3. Something else entirely?
1. Would return on equities go down, since more capital is available?
2. Would economies become more productive, since middlemen are being cut out, and risk capital is available?
3. Something else entirely?
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