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Category: Overview

Overview of the Financial Markets

All valuation measures (price/cash flows, price/book, etc.) on the S&P 500 are at all-time highs except for P/E’s but we are at 2.5 standard deviations on P/E. Even median valuations are near all-time highs at a P/E of 19.

Valuation of Equities

All valuation measures (price/cash flows, price/book, etc.) on the S&P 500 are at all-time highs except for P/E’s but we are at 2.5 standard deviations on P/E. Even median valuations are near all-time highs at a P/E of 19.

Tariffs

Geopolitics and tariffs are also a new major headline that should cause lower valuations. The increase in tensions internationally, especially between the US and both Russia and China is a deterrent to world economic growth and stability.

Productivity

Productivity growth is supposed to be the savior for high valuations and lack of employment growth, but so far that has not been the case.

Housing Bubble

The housing bubble is significantly understated. From 12/19 to 7/22 the average housing prices increased 43% or 29% after inflation using a housing price model that combines median and average like for like property sales from Zillow, Redfin, HUD, FHFA and Case-Shiller and National Association of Realtors.

2020-21 Hypergrowth Bubble

One of the most underrated and significant events was the hypergrowth and “work from home” stocks as well as crypto bubble in 2020-21.

2000 vs. Today Comparison

Another big myth is that today is different than the late 1990’s because most of the late 1990’s tech companies were not profitable, unlike today.

Secular Bull and Bear Markets

This secular bull market which began on 3/9/09, is now 16 years and 8 months long.  The last two secular bull markets lasted 17 years and 7 months (8/82-3/2000) and 16 years and 7 months (6/49-1/66).