Early Innings
What the inflation, tax-shelter, and liquidation cycles of 1970 to 2000 say about the post-pandemic decade.
Nearly every underwriting convention in use today was formed between 1982 and 2021, during a single forty-year decline in the cost of capital — a regime in which time was the investor's ally, leverage was rewarded, and terminal value could be assumed. That regime has ended. This paper sets the post-pandemic repricing against the three cycles that preceded the long compression and asks the question that governs allocation today: is this 1992, when the correct action was to buy aggressively, or 1980, when the correct action was to wait two more years? Our reading is that it resembles 1992 on supply, distress, and valuation, and 1980 on inflation and policy — an early-cycle environment with an unresolved macro overhang, which argues for a behavior rather than a directional bet.