No. of Recommendations: 1
The value of an equity is a function of its future trajectory of real owner earnings. The existence of current alternatives with higher or lower real returns is not an input to that.
The first statement is the first principle of "value" investing, as I understand it. I don't understand the second statement, if the question is where to pursue value. But I agree that current or prospective interest rates should not matter to the choice.
Buffett's comments do point to some sort of relationship between interest rates, value, and prices, though; and I think it is true that the elasticity of that relationship is one reason why value is not always accurately reflected in price.
Baltassar
