We develop a model of equity expected returns based on the idea that, on average, price equals replacement cost. Our main innovation is to allow for time-varying mean reversion speed in the dynamics of valuation. This time varying mean reversion speed captures complex nonlinear interactions, with the interaction between valuation and expected change in return on capital playing a critical role. This interplay between valuation and expected change in return on capital provides a mechanism for creation and destruction of bubbles and anti-bubbles. We visualize the anatomy of bubbles and anti-bubbles by decomposing the term structure of equity discount rates into valuation change, growth and income.