system
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human
Can someone help me digest this statement?

I was just listening to an episode of The Knowledge Project when Chamath Palihapitiya said something that I thought might be interesting to dive into a little bit... He said something along these lines:

"In 1980 if you saw the 30 year interest rate was at 15%/16%, and had to take a guess and bet on the ingenuity of America \[with the hindsight of stating this in the future\], you would say 15% goes to 0% before 15% goes to 50%" and you would have been really right. Had you just been levered long equities you would have made a fortune."

So I have a few questions that I think can help me understand this.

1. What does it mean to "lever long equities"?
2. How does interest rate going from 15% to 0% help long term investment?

Edit: I'd also like to note I wasn't entirely sure this would be the best subreddit, but decided it would be better than something like PersonalFinance because I'm not asking about advice on personal investment, but rather asking for help understanding the economics involved in a statement about personal investment.

Thanks!
gpt
The theory of investment value is in part built on the work of Irving Fisher on interest rates. Interest rates are used to compare to streams of income - in which case they are referred to as the discount rate.

In theory, the value of an equity is all the cash it will produce in the future discounted at the appropriate rate - usually called the discounted cash flow ("DCF") value. 

Palihapitiya is making a probabilistic statement about interest rates, combining it with a theory of investment value, and then noting that this implies you should borrow money to buy equities. 

He is saying that it was more likely that rates would fall, than rise, from a 15% level and this fall in the rate would increase the value of cash flow streams to corporations. 

You buy cash flow streams to corporations when you buy their common stock. Ergo, he is saying that, in that context, you should buy common stock and do so with leverage to get the maximum benefit if rates are so high that they are unlikely to go higher. 

The perpetuity value of a stream of cash is: 

    cash flow / discount rate = perpetuity value

If the discount rate, the interest rate, falls, perpetuity value increases. 

Hope this helps.