Is The Bottom Almost Here?

[vinod1]

7 minutes ago, Santayana said:

Right, but market returns are very much affected by survivorship bias. Lots of companies fail, get dropped from indexes, and then we don't see their poor results in the historical record.  Look at a list of Dow Jones components from 50-60 years ago, many of those companies clearly didn't have earnings that have outpaced inflation or they would still be with us today.

 

We are not talking about individual stocks. I am talking about the broad market. Every company goes bankrupt at some point but the overall corporate profits go up. When you invest in a broad index, you own pretty much the overall economy.

 

DOW returns incorporate the effect of companies going bankrupt. As is the total stock market or S&P 500. The methodology specifically accounts for this. 

 

Last I read about it, only 57 companies in the original S&P 500 still survive today. The S&P 500 return during this period accounts for this fact.

 

So if you are talking about that specific survivorship bias, it is 0%. 

 

When Buffett put 90% of his wife's portfolio is in S&P 500, it would be worthwhile for every investor to spend a few months pondering over this fact. 

 

Vinod

 

 

 

 

Edited April 10, 2023 by vinod1

[TwoCitiesCapital]

46 minutes ago, vinod1 said:

 

Literally a sample size of one, from which you are drawing a very broad conclusion. You might as well make a similar statement "When a Chinese spy balloon crosses continental US, stocks do xxx". 

 

There are many things going on in the 70s and cherry picking time periods does not make for drawing much of any conclusions. Small value too did very well in the 70s. 

 

Except during massive deflation, which means falling revenues across the corporate sector, when bonds are going to be far superior to stocks, in all other cases, stocks are always going to do much better compared to bonds. If PE's go above 40, then it might take a reeeeeelly long time, but even then they are going to beat bonds at 3 or 4%.

 

Vinod

 

That's just simply not been borne out by history. Even prior to 2020, for decades one could've done better than equities by rolling zero coupon treasuries. 

 

Stocks are long duration instruments. They also have a spread component (the equity risk premium). High inflation has historically hurt both. Low inflation helps both.

 

Bonds with lower durations and lower spread components will typically do better when inflation/interest rates are rising. The primary exception to that IS hyperinflation where the floating nature of the stock's coupon (earnings/revenues) helps to more quickly reset than waiting for most bonds' maturities. But in real return calculations you'd have done better owning real assets like houses, gold, energy, etc in that type of environment - stores of wealth and things EVERYONE needs. 

 

You say it's a sample size of 1, but it isn't. The 1970s were inflationary for many. So were many war periods. So have many unrelated periods been in several countries.  Notes/bills tend to outperform equities in these more moderate inflations. We've seen many hyperinflations. Real assets outperform equities - particularly the ones that can be moved out of the country or are tied to things people need like gold and/or energy. 

 

Now if governments cap yields, set rations, and/or confiscate stores of wealth, then fine! Own the the third best alternative. But while those aren't the case, there are better asset classes to own during inflationary periods as has been observed throughout history. Especially when stocks are historically expensive IN that period. 

Edited April 10, 2023 by TwoCitiesCapital

[Spooky]

10 hours ago, TwoCitiesCapital said:

Stocks are ONLY good in modest inflationary environments. There are better asset classes to own in just about any inflationary environment where inflation consistently exceeds 4%. If it's between 0-4%, stocks are what you want to own. 

 

This is correct - once inflation starts to get higher than 4% stocks perform poorly. However, this is an interesting discussion because I think both TwoCities and Vinod are correct - the question is really one of time horizon. Bonds / bills etc. can outperform stocks in the short term but over the long term stocks will dominate.

 

Also, each inflationary period is slightly different, it is not a one size fits all story. For instance, if you look at gold's performance during different inflationary regimes, its performance does not necessarily line up with an inflationary hedge. There is a good analysis of this in Bernstein's book rational expectations.

 

 

[Paarslaars]

Is it relevant to discuss stocks VS bonds in inflationary circumstances when you have such as variety of options within both these categories? 

 

It would surprise me to see bonds outperform every stock industry at 4% inflation. 

[Gregmal]

Out of all the folks I know and have met who “outperform”, almost NONE and them spend any time trying to “outperform”. They just don’t even worry about it. Of the folks that do spend lots of time trying to outperform, pretty much none of them do. It’s such a useless exercise.
 

Like Vinod mentioned, it’s impossible to have high inflation without top line growth somewhere. Eventually inflation goes away, the cycle takes fold…whatever. As long as you weren’t being too granular and were buying durable businesses or assets, you’re good. I mean really when you invest(again stressing investing not short term guessing games) the most important thing is not valuations or rates or inflation or whatever flavor of the month topic exists, but the larger and longer term prosperity of the area you are investing. If someone is massively bearish on the USA, why in the world would they own Berkshire Hathaway long term? Some of this stuff is just simple.

[Santayana]

12 hours ago, vinod1 said:

DOW returns incorporate the effect of companies going bankrupt. As is the total stock market or S&P 500. The methodology specifically accounts for this. 

Not really, they generally get dropped from the index when they start to underperform or have their market cap drop below a certain level, they don't stay in the index all the way to the point of going out of business.    By their very nature the indexes are subject to survivorship bias.  Now if you buy an index fund and let the index rebalance your holding for you, then yes you will generally see earning growth over time that outpaces inflation.  I didn't realize that's what you meant in your original statement,

[changegonnacome]

18 hours ago, vinod1 said:

The point I am making is, you don't compare corporate earnings (which go up) and its yield with bond market yield which is fixed. This is exactly the error made by the investment community as a whole until the 1950s when they used to compare dividend yield of the market with bonds. You can read more about this if interested. 

 

When someone says "earnings yield" of stocks as an approximate return, they mean real return not nominal return. For bonds, the yield you get is the expected nominal return. Both assuming no changes in valuation. Now you do not go about comparing these two as if they are similar, they are not. This is so widely understood and utterly uncontroversial, I am surprised that I need to highlight this.

 

Vinod your throwing around terms like 'real' and 'nominal' in a very strange manner......perhaps we need to clarify terminology because I feel like fundamentally we are having a poorly defined conversation with ambiguous interpretations of terms ......we live in a nominal world......it is the stated figures we see all around us....that your understanding? ...you talk to your boss about a pay increase....its a conversation about increasing your nominal pay by X%...............once you have that nominal pay increase 'in-hand' you can make assessment based on historical or future inflation what you believe that pay increase translate too in REAL terms...so 'nominal' is the number you see.....and 'real' is a number you adjust too in the context of inflation. That's the way i use. How do you use it.....or use in the context of what your comments above.

 

18 hours ago, vinod1 said:

When someone says "earnings yield" of stocks as an approximate return, they mean real return not nominal return. For bonds, the yield you get is the expected nominal return. Both assuming no changes in valuation. Now you do not go about comparing these two as if they are similar, they are not. This is so widely understood and utterly uncontroversial, I am surprised that I need to highlight this.

 

Now let's define "earnings yield'from Investopedia: https://www.investopedia.com/terms/e/earningsyield.asp#:~:text=What Is Earnings Yield%3F,a company's earnings per share. "Earnings yield is the 12-month earnings divided by the share price"

 

OK now take the nominal and real terminology we (hopefully) have agreed on above.....and apply it what you are calling the 'earnings yield' of a stock(s) 'approximate return'....not much approximate about the earnings yield it can be precisely calculated?....it uses the current share prices & TTM earnings....both are knowable......nothing approximate there?..not much place to use real & nominal terminology either...the prospective earnings are, as we all know, uncertain and we spend inordinate pages on this board trying to figure them out..........then also can you please explain to me like I'm labrador what you are saying here - "When someone says "earnings yield" of stocks as an approximate return, they mean real return not nominal return.".......because earnings yield to me & Investopida and everyone I speak to.......refers to a nominal number....the share price divided by 12-month earnings....basically an inverse P/E.......your use of the terminology of real & nominal in this context is confusingly put so my guess is your shoe-horning some other investing concept into these concepts that I'm not getting.

 

The way I might use it would be to calculate XYZ Company's 'earnings yield' of let's call it 3% (share price of $100 divided by TTM earnings of $3 per share). XYZ company has an 'earnings yield' of 3%........you agree?.......this interpretation of an earnings yield is widely accepted by almost everyone in the investing biz...now if we want to start throwing around terminology like real and nominal and attaching it to 'earnings yield'.......we can do that too and this is the only way I know how....... let's say inflation was 5% in the same TTM period that XYZ had its earnings.......the real or inflation adjusted earnings yield is -2% (3% earnings yield minus the TTM inflation rate -5%).

 

Great if we could get to the bottom of this @vinod1........we can have separate discussion on the usefulness of ERP as concept.....the fact its a point in time calculation.....how its performed as a future indicator of stock returns......or indeed a predictor of whether stocks are expensive or cheap on an absolute or relative basis, its failure in emerging markets as per Damadaron etc.

 

 

[TwoCitiesCapital]

3 hours ago, Spooky said:

 

This is correct - once inflation starts to get higher than 4% stocks perform poorly. However, this is an interesting discussion because I think both TwoCities and Vinod are correct - the question is really one of time horizon. Bonds / bills etc. can outperform stocks in the short term but over the long term stocks will dominate.

 

Also, each inflationary period is slightly different, it is not a one size fits all story. For instance, if you look at gold's performance during different inflationary regimes, its performance does not necessarily line up with an inflationary hedge. There is a good analysis of this in Bernstein's book rational expectations.

 

 

 

Agreed. Gold is more of a real rate hedge than an inflation hedge. It does well when real rates are negative (a la the post-covid environment). It gets confused as an inflation hedge because that typically DOES happen in inflationary environments, but if inflation is 10% and yields are 15%, you want to own bonds and not gold and it's those periods that wreck gold's historical track record of correlation with inflation. 

 

I take a diversified approach to this. I own gold. I own Bitcoin. I own slugs of iBonds that I bought when rates were low. Now that they're "high", I've been buying short duration bonds and more recently intermediate spread products like mortgages to lock in these 5-7% yields and have a duration hedge if rates fall. 

 

The stocks I own tend to be commodity producers or EM that benefit more directly from rising consumer prices AND have been broadly cheap relative to most equities for years. 

 

My expectation is that this diversified mix of asset classes will outperform broad large cap equity indices over the next 12-18 months in an inflationary OR recessionary environment (given the heavy tilting towards bonds). 

 

If stocks drop another 20-30%, then broad consideration should be given to adding them now that they're approaching more reasonable valuations. I'd also expect SOME of this basket will have done reasonably well during that period broadening the performance differential and the argument for swapping back to equity exposure. 

 

I'm not saying a 10-year bond will outperform stocks over the next 10-years. But I'm actively taking that bet for the next 1-2 years and will reevaluate as we make our way through that period. If you don't want the duration risk, I expect short term bonds will also outperform - especially if we don't get an immediate pivot from the Fed and you have time to reinvest and compound that 5-6% YTM. 

Edited April 10, 2023 by TwoCitiesCapital

[KCLarkin]

Change, Vinod is simply pointing out that stocks tend to have a growing "coupon". So comparing a static earnings yield to a bond (or inflation) isn't valid.

--

In your simple example.

 

Earnings(t0) = 100

Cost of Living (t0) = 100

Earnings (t1) = 105

Cost of Living (t1) = 105

 

The earnings are "real" in that they keep up with inflation (in this example). There are complicated reasons why this isn't the real world experience (for example, inflation causes maintenance capex > depreciation).

[vinod1]

2 hours ago, Santayana said:

Not really, they generally get dropped from the index when they start to underperform or have their market cap drop below a certain level, they don't stay in the index all the way to the point of going out of business.    By their very nature the indexes are subject to survivorship bias.  Now if you buy an index fund and let the index rebalance your holding for you, then yes you will generally see earning growth over time that outpaces inflation.  I didn't realize that's what you meant in your original statement,

 

Quick comment. I went through these calculations in detail while completing CFA exams. It does not work like what you are thinking. There are all sorts of adjustments made to account for this.

 

I passed the exams in 2008-2009 period (right in time for GFC) and I forgot all about them until you brought this up. 

 

Take the Total Stock Market Index for example, it invests in just about every single available stock investment. That is close to 4000 stocks. Some go bankrupt and drop to zero. Index value reflects that. A new company is IPO'ed and TotStockIndex buys it with some of the funds. The process is dynamic. Winners get big, losers get wiped out. There is not survivorship bias in the sense that you are using the term. Look at the long history of S&P 500 and it matches the performance of total stock market very closely. Heck if you pick a 100 stocks at random out of the 4000 with some limitations given to picking say at least 50 of them from the top 100 stocks by weight, you get pretty much close to index performance. Take a look at Lexington Corporate Leaders fund which is formed in 1935 I think to invest in the leaders of the stocks of that time with the mandate that no new stocks can be bought or sold ever. It now survives as Voya something fund. It matches the overall stock market performance roughly. 

 

Vinod

 

 

Edited April 10, 2023 by vinod1

[vinod1]

3 minutes ago, KCLarkin said:

Change, Vinod is simply pointing out that stocks tend to have a growing "coupon". So comparing a static earnings yield to a bond (or inflation) isn't valid.

--

In your simple example.

 

Earnings(t0) = 100

Cost of Living (t0) = 100

Earnings (t1) = 105

Cost of Living (t1) = 105

 

The earnings are "real" in that they keep up with inflation (in this example). There are complicated reasons why this isn't the real world experience (for example, inflation causes maintenance capex > depreciation).

 

Thank you for making my point clearer than I was every able to make!

 

I would add just one more point. They might not keep up with inflation exactly in the short term. Margins change, tax rates change, etc. But roughly and over the long term, it is just as near a certainty as you can get in investing field.

 

In fact I would challange anyone to find a single country where stocks were not confiscated or wiped out by war, where earnings did not keep up with inflation. One single country for any 30 year period. 

 

Vinod

Edited April 10, 2023 by vinod1

[vinod1]

Almost by definition nominal GDP growth has to translate to nominal revenue growth to corporate sector. Nominal revenue growth to corporate sector implies nominal GDP growth. You cannot have one growing and one falling. A little bit of leakage happens to make it not exactly 1.0000 to 1.0000 correspondence. You just need to believe in addition and multiplication.

 

If you agree, then earnings have to grow in line with revenues - adjusted for profit margin changes. If over 30 years inflation is 5x and profit margin gets cut to half, real GDP growth is say 2%, you still end up with about maintaining earnings in line with inflation despite the margin compression. No real surprise.

 

That is why bonds lose, again and again and again over the long term. 

 

Vinod

 

[TwoCitiesCapital]

15 minutes ago, vinod1 said:

Almost by definition nominal GDP growth has to translate to nominal revenue growth to corporate sector. Nominal revenue growth to corporate sector implies nominal GDP growth. You cannot have one growing and one falling. A little bit of leakage happens to make it not exactly 1.0000 to 1.0000 correspondence. You just need to believe in addition and multiplication.

 

If you agree, then earnings have to grow in line with revenues - adjusted for profit margin changes. If over 30 years inflation is 5x and profit margin gets cut to half, real GDP growth is say 2%, you still end up with about maintaining earnings in line with inflation despite the margin compression. No real surprise.

 

That is why bonds lose, again and again and again over the long term. 

 

Vinod

 

 

As pointed out, margins tend to contract because prices/wages/inputs rose faster than can be passed onto consumers. This is EXACTLY what we've seen over the last 18 months as as inflation has averaged ~8% over that time. Earnings didn't just not keep up - they contracted! This is a shorter term phenomenon that stops as soon as inflation stabilizes, but is valid as long as it keeps rising - profits will contract trying to keep up. 

 

Additionally, multiples in those profits tend to contract. In the 1970s they went from ~19 to ~7. We started this current period near ~30 and now are currently sitting near ~19. Maybe we don't go to 7, but I'm highly skeptical we remain as high as 19 either considering even THAT is above historical averages despite the inflation and the incoming recession. 

 

This is why stocks lose in inflation - especially if you're invested at the front-end of the cycle change. The profits are only one input - how much you're paying for them is the second piece. Profits get hit early on, but tend to recover. You're already trailing inflation due to this mechanism, but then it's the multiple that gets totally ravaged taking you even further behind. At that point, equities become a good bargain for hedging future inflation. 

 

Real returns in equities in the from 1970-1974 was nearly -30%! How?!?! How does an inflation hedge underperform inflation by 30% points over 4-years?!?! About 1/3 of that from negative price performance and the remainder was from failing to keep up with high inflation. Even by the end of the decade, stocks had a negative real return of -0.5%/annum for the entire decade. Did NOT keep up with inflation over 10-years let alone produce real returns. 

 

But you did well if you bought the dips and sold the rallies which is primarily what I've been advocating here (or you did well simply holding shorter duration bonds and rolling them if you don't want to be active in the markets). 

 

How long must your time horizon be it to be true that equities outperform in inflation if 10-years isn't long enough?!?! Especially considering we started this current period at valuations ~60% higher and comparable to prior historic euphoric tops like 1929 and 2000 when inflation WASN'T the problem?

Edited April 10, 2023 by TwoCitiesCapital

[Santayana]

32 minutes ago, vinod1 said:

Take a look at Lexington Corporate Leaders fund which is formed in 1935 I think to invest in the leaders of the stocks of that time with the mandate that no new stocks can be bought or sold ever. It now survives as Voya something fund. It matches the overall stock market performance roughly. 

How does BRK.B have a 13% weighting in Voya if they haven't changed their stock holdings since 1935?

[thepupil]

9 minutes ago, Santayana said:

How does BRK.B have a 13% weighting in Voya if they haven't changed their stock holdings since 1935?

 

Berkshire has issued stock for a few acquisitions, Dexter Shoe (the dramatically named biggest mistake) and BNSF. I suspect the trust owned a BNSF predecessor which became Berkshire Hathaway stock. 

Edited April 10, 2023 by thepupil

[Spekulatius]

43 minutes ago, vinod1 said:

 

Quick comment. I went through these calculations in detail while completing CFA exams. It does not work like what you are thinking. There are all sorts of adjustments made to account for this.

 

I passed the exams in 2008-2009 period (right in time for GFC) and I forgot all about them until you brought this up. 

 

Take the Total Stock Market Index for example, it invests in just about every single available stock investment. That is close to 4000 stocks. Some go bankrupt and drop to zero. Index value reflects that. A new company is IPO'ed and TotStockIndex buys it with some of the funds. The process is dynamic. Winners get big, losers get wiped out. There is not survivorship bias in the sense that you are using the term. Look at the long history of S&P 500 and it matches the performance of total stock market very closely. Heck if you pick a 100 stocks at random out of the 4000 with some limitations given to picking say at least 50 of them from the top 100 stocks by weight, you get pretty much close to index performance. Take a look at Lexington Corporate Leaders fund which is formed in 1935 I think to invest in the leaders of the stocks of that time with the mandate that no new stocks can be bought or sold ever. It now survives as Voya something fund. It matches the overall stock market performance roughly. 

 

Vinod

 

 

yes, the big advantage of buying a broad based index fund is that you don't need to worry about survivorship bias - the reshuffling of the index takes care of this for you and it is included in the annualized results.

 

If you build your own portfolio, especially when running concentrated, you need to think about how to take care of losers.

[jfan]

This paper from Research Affiliates gives some historical base rates for inflation rate movements. 

 

The price of time by Ed Chancellor is an interesting historical summary of interest rates across long spans of time across ancient, medieval, and modern societies. 

965-history-lessons-how-transitory-is-inflation.pdf

[vinod1]

21 minutes ago, thepupil said:

 

Berkshire has issued stock for a few acquisitions, Dexter Shoe (the dramatically named biggest mistake) and BNSF. I suspect the trust owned a BNSF predecessor which became Berkshire Hathaway

 

+1

 

BRK -> BNSF Railway Company -> Atchison, Topeka and Santa Fe Railway

 

[Santayana]

Thanks, that makes sense.    However, I looked at them a bit more and found that while they can't add new stocks, they can re-weight existing holdings, and they can sell.  They sold C in 2009.   I'm not saying survivorship bias will have a huge effect on what you're saying, but I do think it's wrong to discount it entirely, especially when discussing periods of high inflation which is when the weakest companies will the most likely to struggle.

[vinod1]

37 minutes ago, TwoCitiesCapital said:

 

As pointed out, margins tend to contract because prices/wages/inputs rose faster than can be passed onto consumers. This is EXACTLY what we've seen over the last 18 months as as inflation has averaged ~8% over that time. Earnings didn't just not keep up - they contracted! This is a shorter term phenomenon that stops as soon as inflation stabilizes, but is valid as long as it keeps rising - profits will contract trying to keep up. 

 

To answer this specific point. I say correlation is not causation.

 

In 2021 profit margins were at 13.3% - a historic outlier. A number that is vastly higher than any in the entire corporate history of US. Many reasons - stimulus, opening up, pent up demand, etc against a supply constrained economy. Those margins are not going to hold - inflation or deflation or disinflation. Margins went down as they normally do. 

 

You are pinning this all on "look this is all due to inflation". If we had deflation instead, profit margins would still have contracted. Or do you genuinely believe that deflation or heck even stable 1-2% inflation, would have kept profit margins high even now?

 

Vinod

 

 

[vinod1]

2 minutes ago, Santayana said:

Thanks, that makes sense.    However, I looked at them a bit more and found that while they can't add new stocks, they can re-weight existing holdings, and they can sell.  They sold C in 2009.   I'm not saying survivorship bias will have a huge effect on what you're saying, but I do think it's wrong to discount it entirely, especially when discussing periods of high inflation which is when the weakest companies will the most likely to struggle.

 

This specific example of Lexington Corporate Leaders is no doubt survivorship bias. We do not know how other funds with a similar mandate would have performed. This is just such an interesting example, I threw it out there. But I accept survivorship bias is a very valid argument. I dont disagree at all.

 

I did not follow the fund since a long time and dont know what might have changed after it was bought out by Voya.

 

Vinod

[TwoCitiesCapital]

21 minutes ago, vinod1 said:

 

To answer this specific point. I say correlation is not causation.

 

In 2021 profit margins were at 13.3% - a historic outlier. A number that is vastly higher than any in the entire corporate history of US. Many reasons - stimulus, opening up, pent up demand, etc against a supply constrained economy. Those margins are not going to hold - inflation or deflation or disinflation. Margins went down as they normally do. 

 

You are pinning this all on "look this is all due to inflation". If we had deflation instead, profit margins would still have contracted. Or do you genuinely believe that deflation or heck even stable 1-2% inflation, would have kept profit margins high even now?

 

Vinod

 

 

 

Corporate margins have been rising for the last 15 years. They've spent most of that time at 9-12% which is elevated relative to history and has never persisted before. So the 13.3% was the end of what has otherwise been a consistent trend in corporate profits that has been exceptionally elevated and doesn't seem terribly out of place compared to the ~12.5% that was accomplished ~2019 without the assistance of trillions of stimulus and 0% rates. 

 

What did inflation average over that period? Something in the ballpark of like 1.5%. 

 

So yes, I believe elevated corporate margins were, in part, in response to stable and low inflation. 

 

Why is it hard to see how these might be related? Maybe corporations can spend excess profits consolidating industries, eliminating overlapping jobs, and keeping the supply of labor high to keep inflation/labor pay low? Maybe they can spend excess profits lobbying for lower taxes and less burdensome regulation? Maybe they can spend excess profits doing things that support further excess profits instead of not having those profits by being behind the ball on inflation?  

 

And what else did we see over that period? Multiples applied to profits that have previously only been seen at the top of cycles to persisted for years! They're still persisting! Everyone talks about how this is the most predicted recession in history and yet we trade at 19-20x earnings that are already shrinking going into it! Those aren't recessionary prices! 

 

So yes, I think it's clear that the recent history inflation is very related to profit margins and multiples - just as it has been historically.  

 

 

Edited April 10, 2023 by TwoCitiesCapital

[vinod1]

54 minutes ago, TwoCitiesCapital said:

Real returns in equities in the from 1970-1974 was nearly -30%! How?!?! How does an inflation hedge underperform inflation by 30% points over 4-years?!?! About 1/3 of that from negative price performance and the remainder was from failing to keep up with high inflation. Even by the end of the decade, stocks had a negative real return of -0.5%/annum for the entire decade. Did NOT keep up with inflation over 10-years let alone produce real returns. 

 

This is cherry picking! A very specific time period that coincides with end of a historic bear market!

 

What you are saying is stocks lose during bear markets! Yes they do. Stocks lose even over 10 years sometimes. 

 

The best example you can pick is a negative 0.5% annual return. That is just about keeping up with inflation, roughly. Cash and bonds did pretty much similarly to stocks at that time if I recall not much difference.

 

For stocks to perform badly (not just compared to bonds) you need one of three conditions (1) war that devastates the economy (2) high and continuing inflation (3) financial crisis. Outside of these 3, stocks perform well. Which of these are you betting on? 

 

Vinod

[Gregmal]

30 minutes ago, vinod1 said:

2021 profit margins were at 13.3% - a historic outlier. A number that is vastly higher than any in the entire corporate history of US.

This is another really big flaw I see in the big bear arguments. I agree with “2021 was a peak year” and this should be obvious. It also goes without saying that it was not a normal time either. So there’s a lack of sophistication to an argument that things declining from what was a clear one off….equals…. the end of the world or some terrible situation. It’s why there’s a huge overblown sensationalism to the “see earnings and margins are coming down!” stuff.

[dealraker]

Pardon my medieval wording but I'm an English history book reader.

 

TwoCities, I'm envisioning an online battle between you and your small group of believing knights here and Saul's Investing Discussions on Motley Fool.  It would be:

 

Anything But Stocks vs. Only Hyper Sales Growth Stocks With No Profits likely ever.  

 

Both sides claim the past as proof of their intense beliefs!

 

Be aware though that Saul, when he's gone way out there with his use of past stats, gets 800 to thousands of likes.  So you are up against quite the opposition!  

 

My view is that some businessmen, via their reasonably priced stocks, are going to get filthy rich during the years of this discussion.  

 

Edited April 10, 2023 by dealraker