Figuring Out with Raj Shamani · Oct 10, 2026 · 118m · 104m saved
With Saurabh Mukherjea, Founder & CIO, Marcellus Investment Managers
The yield on the 10-year US Treasury fell from double digits in 1980 to close to zero during the pandemic, after the Federal Reserve flooded the world with $10 trillion. Saurabh Mukherjea said that 40-year slide is over.
Most investors still act as if borrowing is cheap. Mukherjea said the cost of money has been rising since 2020, and that a reckoning could arrive in 2026 or 2027.
"A lot of things which are valued at trillions of dollars will end up getting valued at billions of dollars." — Saurabh Mukherjea
Mukherjea, founder and chief investment officer of Marcellus Investment Managers, wrote a note to clients on Feb. 2, 2007, telling them to short UK lenders before the financial crisis. His new book, The Art of Enduring, studies Indian companies that have returned about 100 times over 20 years through repeated crises.
The full interview is covered here so you can skip it. 118 minutes of audio, 14 minutes of reading.
Here are the 12 takeaways that matter.
Key Takeaways
The 40-year fall in the cost of money ended in 2020, and valuations will be challenged as it rises
AI giants are now borrowing on the scale of governments, pushing up US bond yields
India is awash in easy credit, from phones on installment plans to loans for steel bars
Oil at $120 or a food price shock could push inflation, yields and defaults higher
Marcellus screens for 15% return on capital, 12% revenue growth and 12% earnings growth over 15 years
The companies that pass know their core, train leaders and seek out hard challenges
Agriculture, private health care and diagnostics stand to gain as governments pull back
Mukherjea sees a real risk the rupee breaks 100 per dollar, which would help exporters like Divi's Laboratories
Defense suppliers face years-long order backlogs as conflict spreads
He suggests a portfolio split in fifths across Indian stocks, global stocks, gold, bonds and cash
Small and midcaps should suffer more than large caps as interest rates rise
1. The Price of Money
Mukherjea measures the price of money by the 10-year US Treasury yield. It was in double digits in 1980 and fell for 40 years, bottoming during the pandemic, when he said the Fed printed almost 10 times what it did during the 2008 crisis.
He said people who grew up with falling rates still treat money as free
That belief, he said, leads governments to finance wars with no logical end and companies to spend a trillion dollars a year on AI. He expects valuations to fall as the cost of money rises, whether in real estate or stocks. Bad debts would follow.
He does not have a fixed number for where long-term dollar rates settle. Some forecasters say 5%, others 7%, he said.
He said the shortage of memory chips is artificial, a product of the same money expansion. A typical memory maker earned operating margins of 5% to 6% across a cycle before the pandemic. Those margins are now 80% to 90%, and one memory company is valued at close to the whole Indian stock market, he said.
The large US technology companies now issue bonds on a huge scale to fund data centers. Some earn $120 billion to $200 billion in profit a year, and he said they are borrowing more than governments. That pushes up the cost of money. He said the Fed will struggle to print its way out this time, because doing so would push US household inflation too high.
