DOES SECULAR STAGNATION MATTER?

Sometimes investors ask me whether secular stagnation is bad for Alliance’s investments.

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In short, the answer is no.

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The longer answer is that secular stagnation is a macro trend where global economic growth projects to slow down and interest rates will drop to the point where they may even become negative. There are economists who argue that this is a long term trend that dates back centuries. But even if they’re right, savvy investors like Alliance have plenty of opportunities.

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Alliance focuses on specific deals, with very particular profiles. We have developed a deep specialization in our niche of triple net lease commercial properties that allows us to correctly pick out opportunities in any environment.

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People still need to live and do business. Real estate is necessary and growth isn’t evenly distributed. Sometimes properties are overlooked, misunderstood, or mispriced for a variety of reasons. Sellers may need to raise money quickly. Unusual regulatory conditions can scare away other buyers. The market may not properly see how changing demographics are likely to impact a particular property.

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With a wide net and a critical eye, there are always good deals to be found. When we find them, low interest rates just make it cheaper for us to finance these winning investments.

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Unlike global billion dollar funds funds, we don’t need to find huge deals, or lots of deals. We focus on finding the good deals.

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So the idea that big macro forces like secular stagnation might be shaping the economy are interesting, but they’re irrelevant to our business. There’s always growth and opportunity for people who know where to look, how to see, and how to execute. That’s Alliance’s business.

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