Excess Returns The Case for Permanently Higher Market Valuations | Jim Paulsen
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Nov 2, 2025 Jim Paulsen, a veteran market strategist known for his data-driven insights, dives into the evolving landscape of market valuations. He highlights how pervasive market fears, shifts in liquidity, and a drop in recession frequency are impacting investor sentiment and long-term returns. Paulsen discusses the historical changes in the CAPE ratio and notes that high profitability and productivity justify current valuations. He also emphasizes that while tech remains expensive, many sectors are still undervalued, setting the stage for potential growth.
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Monitor Market Internals And Non-Government Data
- Watch market internals like cyclical sector performance and inflation-sensitive equities for economic momentum.
- Use non-government releases (ADP, regional Feds) to anticipate volatility when official data restarts.
Prioritize Environment Over Timing
- Focus more on whether the market environment is supportive or hostile rather than strict valuation timing.
- Track sentiment and policy backdrop before overweighting historical valuation signals.
Value Beginnings Shaped A Skeptical View
- Jim Paulsen recounts starting his career in a value shop that avoided double-digit multiples.
- He says that background shaped his skepticism about relying solely on valuation rules.
