From 1900 to 2009, the economy grew at about 6% annualized during that period. Since 2009, because of these interventions and zero interest rates, the average rate on stocks has now grown by 4 full percentage points to 12%. That is unsustainable. We've raised an entire generation of investors who have never seen a real bear market until now. And this is why we can't sustain inflation above 2%. This is why the Fed is so focused on 2% inflation because the economy can't withstand it.
IN THIS EPISODE, YOU’LL LEARN:
09:18 - Understanding the basics of valuations and how to interpret price multiples.
17:00 - What the Shiller P/E (CAPE) ratio is, and why it is telling us future returns are expected to be low going forward.
25:46 - What Lance thinks are some catalysts that could cause the market to mean revert to historically normal valuation levels.
31:35 - Why the Buffett Indicator is a valuable valuation tool and why it is saying markets are overvalued today.
38:05 - The relationship between earnings and GDP and why EPS cannot grow faster than GDP in the long run.
49:50 - Why Lance thinks bonds are the best investment right now and what investment strategy he recommends.
And much, much more!
*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.
BOOKS AND RESOURCES
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