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The Problem with High Stock Valuations

Ben Felix 95 views

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S&P500 now has a P/B of 500 and CAPE is above 3850 (higher than 2021 peak) Thoughts?
Comment from : @Miyotears

If you were in a large cap value etf and the market crashed, wouldnt they fall as well?
Comment from : @Ed_Gein

Isn't that in contrast with the efficient market hypothesis you believe in?br(Expensive stocks should be so, because their growth will be higher etc at the end making the same returns)
Comment from : @960john

After a sharp run up the S & P from 2000 to 2013 returned zero percent That's ZERO over thirteen years Just sayin
Comment from : @RonAlfonse-t7y

Videoquality in this video is lower than of previous videos Could be the mic breaking the focus
Comment from : @momchilandonov

What does it mean with "Dimensional"? Please help me to know better
Comment from : @albertocosta3536

The very act of tilting based on valuations is in fact a form of market timing by another name though, right?
Comment from : @samfaught2540

Can you show all of those graphs denominated in CA$?
Comment from : @donpeters9534

so what is the take away from this? Should we just buy a broad based world stock ETF? should we buy small cap ETF ? or are there decent priced value ETFs?
Comment from : @wmrajput

I'm 100 in AVUV and AVDV, so I'm feeling so smug about the conclusion
Comment from : @gregerlandson7193

Excellent overview Valuations are notoriously difficult to work with since there is no agreed standard or even a unified definition of what you are trying to measure Your model will often decide the outcome Several MAG7 have had higher valuations than today - would you be have been better off not having bought? The basic concept makes perfect sense, but in practice valuation is a blunt tool when it comes to high tech, bio-medico and software companies which have the ability (or not) to build their own market space such as META did when introducing adds
Comment from : @meibing4912

As someone invested in global equities who's seen his portfolio get clobbered by the S&P 500, I needed to hear this
Comment from : @gamarad

I would also suggest that the economic success of the M7 should mean the competitors & some of the companies using their services are worth less, if they improve productivity by enough than otherwise would have happened you could justify higher p/e on the whole market but more likely we will see mean reversion(eu action being taken & the increasing unstable politics in the US & increasing deglobalisation)
Comment from : @jasonwhiteley3612

For P/B ratio you use US market 30-Year average, but wouldn't it make more sense to have individual historical P/B rates for each benchmark? For instance, the Nasdaq consistently trades higher than, let's say, the MSCI World Index
Comment from : @Miyotears

Do those returns include dividends?
Comment from : @gimusk5667

Another good video Could you also tell us about the correlation or relation between billionaires/insider sellings and valuations? They have more information about the economy, world and market than us, so they might be timing the market at least better than an average people and hence the market
Comment from :

International stocks woule never outperfrom the US stocks You've been saying this over a few years and us stocks are only skyrocketing You are wrong
Comment from : @dot7999

Thank you Ben for bringing light on the topic brDoes someone know if value stocks are included in the European ETFs based on the MSCI World Index like the Vanguard FTSE All-World?
Comment from : @umbertopappalardi8667

Diversity is always the answer to these problems
Comment from : @Random-ne3ed

So good to have you back, Ben!
Comment from : @MoonlitMedows

You have been saying this same thing for multiple years that US markets are overvalued and that international/emerging markets are better right now Yet the US markets have outperformed international markets over the past few years since you have been saying that People have been saying this same thing for decades as well yet its still the same story and the results continue to speak for themselves and show no sign of going a different way Emerging markets are great until you have another Russia-Ukraine situation and you lose your entire investment cause of that If I would have took your advice on buying into emerging markets I would have lost out on so much gains I will stick to my US stocks thank you
Comment from : @Antares-rt5ub

Ben, I would like to see you do a video on BDCs and private credit!
Comment from : @McFarlandFinance

I miss the old intro :(
Comment from : @pipichi8441

Excellent video! Thank you!
Comment from : @pongop

To be honest 'high stock valuations' sounds to me like timing the market and will guarantee suboptimal returns
Comment from : @seniorkevin

I've heard this for years about international stocks Also there is tons of correlation between usa and international Good luck to all of you international stocks they never perform
Comment from : @dougspry3101

2:50 I look up the Dimensional US Marketwide Value Index (DFUV), but it is inception date is only 1998 while your chart shows 1968, why is that?
Comment from : @l0703994

I think with the advent of generative AI, yoy inflation back to target, and an apparent peak in the cost of shipping, above average real GDP growth is realistic This could drive strong future returns, even at higher valuations
Comment from : @ezekielstratton9255

Basically useless video Nobody ever worried about high valuations of value stocks
Comment from : @JensN113

I'm considering a review of my $600K portfolio allocations, particularly in light of the pause in interest rate hikes I'm diversifying into tech stocks and renewable energy They seem promising but i'm not so sure
Comment from : @Theresaa12

@4:00 I find it very interesting to see that India’s CAPE ratio is as high as the US’s I feel like I hear nothing about Indian stocks, yet they are similarly “expensive” to the US market??
Comment from : @pioneer7777777

this is tech bubble 20
Comment from : @estring123

I'm 50 in value stocks And across my large cap/small cap valueI'm 50 US, 25 Emerging markets, 25 developing markets Wish me luck!
Comment from : @raymondchou9550

Do valuations matter anymore? Does any data matter anymore? The stocks literally only go straight up regardless of the data
Comment from : @dazedhavoc

British stocks are really cheap, almost like Chinese stocks but without geopolitical risks So many opportunities among value stocks
Comment from : @druvaciam5407

Lex is that you
Comment from : @alawi0juventus

I dont care if the market is overvalued or under , i care about the value of an individual business
Comment from : @ashishmantri3684

Not emerging markets or China 🇨🇳 it’s cheaper
Comment from : @manuvns

Is this a real person or an AI creation? 🤖
Comment from : @GringoAzteco

Hi Ben what are your thoughts on the recent talk about passive investing undermining the efficient market theory?
Comment from : @atomic027

What is the best international market index fund you would recommend Ben?
Comment from : @inertiaforce7846

Ben, what is your opinion on having a cash buffer in retirement that you use when the market is down? Does the lack of stock withdrawals in a down market make up for the lower return on cash relative to stocks?
Comment from : @WhatIsThis-zq4hk

Great video again! I have been thinking if i made a misstake when i lump sumed my money in to the Vanguard FTSE All-World UCITS ETF, but your video make me feel comfortable, hope its a good choice over next decade Thanks a lot!
Comment from : @frantavohanka1804

What are some ETF's that capture international emerging markets?
Comment from : @Filthypagan

If someone knew whether a stock was expensive or cheap, they would be billionaires in Monaco or Luxembourg
Comment from : @AndreOliveira-oq9vp

Ben thank you so much for all of your videos They bring true value and I never feel like I wasted any of my time on click bait when I watch your videos Truly well researched and/or knowledgeable, and I learn a lot from youbrbrUnfortunately for me, I'm a 'do as I say, not as I do' example as I try my hand at value investing by trying to pick wonderful businesses at fair or better valuations Here's hoping I am at least good enough at it to slightly outperform the markets and make my research efforts worth my time :)
Comment from : @helloken

Can you recommend good international ETF?
Comment from : @xMonsieurGray

When stock prices are high it means we are leaning capitalist society When people talk about earnings they are leaning socialist
Comment from : @johnd5601

Small caps have been and remain cheap, indeed
Comment from : @TuEIite

As someone who has a portfolio with all the things including small and value tilts, let me just say that watching US large cap growth dominate the last decade hasn’t been super enjoyable “You’ll always wish you had more of the best asset class” has never been more true
Comment from : @TheoreticallyNo

In the UK there isn't a global ex US ETF As I expect China to invade Taiwan some day I avoid EM, and EM ex ChinabrI buy the FTSE Developed World which is mainly US
Comment from : @george6977

I stay invested yo!
Comment from : @muffemod

I very much enjoy your content good Sir Crisp analysis of facts and competent insights Keep up the good work!
Comment from : @davidschelkens9481

Great as always
Comment from : @Frinans

I think a big complicating factor for some of us is that we genuinely believe that AGI / ASI is very plausible on a 20 year timeframebrbrI don't think people really model out or take seriously what that would look like economically brbrI know Sam Altman released some blog article taking about a hypothetical American Equity Fund, essentially a UBI type asset that gave away a small fixed portion of its assets to the publicbrbrWith the notion that the company would blast past current companies and everyone would essentially be forced to buy stock in this unimaginably hyper successful company to survivebrbrI know there's a strong bias against "this time is different" but maybe this time IS differentbrbrNot just the ability to automate people, but the ability to automate any task at a freakishly low cost is fast approachingbrbrLife spans could extend 10-15 yrsbrbrI just don't think the traditional logic necessarily holds up
Comment from : @zzzzzzzzzzz6

Investing in various countries brings also different difficulties that you may not think about from perspective of your home country Therefore something what seems to be cheaper actually isn't because of many variables that you may not even be aware of due to, let's say, language barriers Raw numbers don't necessarily explain everything
Comment from : @Silvervend

Thank you Ben for making these videos I'm a recent uni graduate and thanks to you have a clear idea on how investing works Sensible, "boring" investment advice is exactly what makes me feel confident in my financial decisions
Comment from : @m136dalie

Great video Could you please ditch the semi-transparent background on charts and always add (at minimum) axis labels to charts?
Comment from : @j10001

Hi Ben, Great video and perfect timing Each week i look at my international portfolio dwindling and I wonder why I invest internationally when the US market is booming Rear view mirror bias Looking at the P/E ratios globally is reassuring
Comment from : @jambiee

Great video
Comment from : @randomjoe1131

Ben, the world's economy is becoming increasingly connected The 120-day correlation between SPY and VXUS is rarely lower than 07 over the last ten years How much does this affect your efforts to maintain an internationally diversified portfolio? Thanks and great video!!
Comment from : @moneycessity

As a plebe this is interesting annnnd I have no idea what to do about it except continue to purchase total market index funds in trad 401k and Roth IRA, and go live life It will be very interesting to see how it all plays out!
Comment from : @captured_agent5714

great intel what's the global equivalent of the VTI?
Comment from : @RawGuruRecords

Either we get a massive market correction, or markets hover flat for years at these valuations I think it's a good time to at least be sceptical at these prices
Comment from : @moonshot2738

In my comment, I meant the US S&P500 index Sorry for not being specific, and thanks for the video!
Comment from : @streettrialsandstuff

@BenFelixCSI Is timing a consideration of a (partial) move into bonds?
Comment from : @christopherwilliams6191

5:12 Put another way, asset allocation is the biggest determinant of returns
Comment from : @Magic_beans_

Youve read my mind!
Comment from : @jsmith108

Got it Going all in on gas station sushi!
Comment from : @cbqmrbqm8972

Does this mean I should keep back on investing right now?
Comment from : @MaritsaDarman

How will the widespread adoption of AI affect corporate profits and market valuations? My guess is that since AI improves corporate productivity it will lead to increased profits by lowering costs Hence, higher stock market returns
Comment from : @vinhandle

Hi Ben, would you consider VGRO a broad index portfolio? Thanks for posting all those insightful videos I love em brbrCheers
Comment from : @nightowl19696

Great video BenbrbrThough isn't saying "value stocks aren't overvalued" a bit of a tautology? They wouldn't be value stocks if they were overvalued
Comment from : @abcdefghijk8223

AVGV and chill
Comment from : @JulietHotelFoxtrot

I have a question about the job of a portfolio manager at PWL capital Given that so much advice boils down to "more diversity is more good" how does this translate to your day to day work?brbrI find it hard to see what other work is necessary when this key point seems to always hold true It would be interesting to see a video on how these views translate into bussiness as usual work
Comment from : @arjandhaliwal4962

What a great video! One of your absolute best with extremely concise and apt description of the current situation
Comment from : @stiffeification

hi Ben, In a previous video you said that the size premium is still there once you clean up the not profitable companies What about the idea to test that the benefit of international diversification is still there once you clean up the not profitable / not reliable on financial data companies from the index? Wouldn’t it make the international diversification basically useless for the average passive investor (higher fees and risk premium lost for market inefficiencies compared to theory )?
Comment from : @prova1113

So hypothetically speaking, if we have cash to invest, and PWL is managing our portfolio, we should not leave that cash in the bank, correct? Okay, not so hypothetical 😏
Comment from : @robinimpey101

Wanted to say hello I was recommended to your channel from U Tuber “ Otters retirement corner” His name is Howard a down to earth influencer I enjoy watching his videos on retirement The video he posted These are the best retirement U Tubers … this is we’re I got your name
Comment from : @pppaaattt8401

Just keep shoveling in AVGV, AVNV, and AVUV, bond fund, and metals (my pick is Palladium PALL)
Comment from : @stonks4days1

Buy UK Cheap as chips
Comment from : @johnristheanswer

In the UK here bStares in FTSE250/b
Comment from : @ttrjw

Ben would you say that good balance makes 70 s&p, 20 world msci and 10 semiconductor etf
Comment from : @HL-uw7fk

The problem with value is that, in general, it has miserably underperformed the market let alone IT or growth stocks over the last 15-17 years which is a long time That's roughly half of one's investing timespan You need to have ironclad conviction in Fama French to endure that That said, im 30 in deep value ETF and that's my absolute maximum
Comment from : @massafelipe8063

Another excellent video Thanks !
Comment from : @PassivePortfolios

Ben - how would you go about identifying value stocks? price to book ratio? price to earnings? what does the research suggest?
Comment from : @wli2718

I've switched my tax-deferred assets to the Russell 2000
Comment from : @ryann8348

Ben, can i capture the value premium with this IE00B8GKDB10 ucit etf its target the Ftse All World high dividend yield index In Europe there is no good Value Etf and i know the relevant of dividend irrelevant 😅
Comment from : @ichdu7391

Hi Ben, could you talk about managed futures ? The ETFs available now (eg DBMF) seem very attractively uncorrelated to stocks and bonds, and I think this could be expected to persist since IIUC these funds basically follow the momentum factor (in the pure academic way, ie short market and long momentum) But I'd love to learn more on the topic
Comment from : @dodger2051

Any advice on global diversification will be really appreciated
Comment from : @auslander1026

Ben…how do you know what’s on our minds? Timely video! Do you have same acumen when it comes to what’s on your spouse’s mind?
Comment from : @vicgill1980