Warren Buffett: Interest rates are the foundation of all asset valuations. If you're certain that interest rates will be 0% for the next 100 years, then even a 1% yield would seem very attractive. But if you buy an asset with only a 1% yield and then interest rates rise to 8%, its price could plummet, and you might even lose most of your principal. Low interest rates drive up the valuations of stocks, bonds, and real estate: when risk-free returns are low enough, all cash flow-generating assets become more expensive.