How 2019's Market Top Parallels the 2008 Financial Crisis (w/ Sven Henrich)

[progree]

12. I would add that the various P/E ratios that say the market is overvalued don't take into account

that the competition to stocks -- bonds and other fixed income investments -- have way low interest rates compared to the average of the last 80+ years. It's impossible to find anything above the 2's percent range in bonds unless one is willing to invest in high-yield (aka junk) bonds or go way out like 30 years in maturity (and bear a ton of interest rate risk betting that interest rates will stay about as low as today).

Edited to add: That said, I'm not saying stocks aren't valued on the high side even with consideration of the above. But timing the market is very difficult because it involves making two correct decisions: selling at the right time and buying at the right time. And one has to be in the stock market most of the time in order to have any chance of beating a buy-and-hold investor.

Also, dividend yields on many high quality stocks beat the 2's percent yields on bonds (and also grow over time, unlike bond interest coupons which are "fixed", that's why they are called "fixed income" investments).

But the perma-bears are always right (in their own minds) -- when the market is high, they'll say "it's a bubble, its a bubble". When the market turns way down (and it will, temporarily), they'll say, "see I told you so".