Didn't expect such a clear and concise update on market valuations, your analysis of the CAPE ratio is truely insightful. What if the unprecedented rate of technological advancement, especially in AI, acts as a long-term disrupter to these historical patterns, allowing for sustained growth even with high starting valuations?
That’s a really good question and certainly possible. One way you could read the stock market valuations right now is that they are high for precisely for that reason. The market expects future returns to be higher than history would suggest so people are willing to pay more.
“This time it’s different” could actually be true this time. Many reasonable economists expect AI to add 0.5-1% to GDP growth , which if sustained, would be massive and maybe lead to positive 10 year returns. For that reason and others I’m still heavily invested in stocks (the other main reason is lack of better investment options to put my money that won’t get eaten by inflation.)
Excellent, rational analysis of where we find ourselves today. The four recommendations are perfect for any investor. Thank you for presenting this calm, realistic and actionable take.
Didn't expect such a clear and concise update on market valuations, your analysis of the CAPE ratio is truely insightful. What if the unprecedented rate of technological advancement, especially in AI, acts as a long-term disrupter to these historical patterns, allowing for sustained growth even with high starting valuations?
That’s a really good question and certainly possible. One way you could read the stock market valuations right now is that they are high for precisely for that reason. The market expects future returns to be higher than history would suggest so people are willing to pay more.
“This time it’s different” could actually be true this time. Many reasonable economists expect AI to add 0.5-1% to GDP growth , which if sustained, would be massive and maybe lead to positive 10 year returns. For that reason and others I’m still heavily invested in stocks (the other main reason is lack of better investment options to put my money that won’t get eaten by inflation.)
How are you thinking about your own strategy?
Excellent, rational analysis of where we find ourselves today. The four recommendations are perfect for any investor. Thank you for presenting this calm, realistic and actionable take.
Thank you!