For nearly three decades, investors have enjoyed the dual tailwinds of accelerating global cash flow growth and ever-declining costs of finance. These conditions allowed asset prices to rise largely independent of fundamentals. But with debt levels now elevated, interest rates still biting, and trade fragmentation on the rise, that era is ending.
“Entry price, cash flow certainty, and balance sheet strength will once again determine long-term returns,” says Talaria Co-CIO, Chad Padowitz. “Companies with stretched multiples, high leverage, and distant promises of growth will be far more vulnerable than those with real earnings power and financial discipline.”
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