Hello David
I read with great interest your blog post on the valuation of the stock market, particularly since it is pertinent to a project I am working on.
I think there are at least three factors that support current valuations (which, as you know, are nothing but expectations of future earnings):
Baby boomers entering retirement, who currently have a significant portion of their wealth tied up in their homes, will be looking to invest this portion as they downsize or move into retirement homes
Money from China and the Middle East seeking safe havens
And the rapid pace of technological innovation affecting most industries, particularly manufacturing and healthcare
To quote Warren Buffet from his 2014 letter "Charlie and I have always considered a “bet” on ever-rising U.S. prosperity to be very close to a sure thing. Indeed, who has ever benefited during the past 238 years by betting
against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. In my lifetime alone,
real per-capita U.S. output has sextupled. My parents could not have dreamed in 1930 of the world their son would see. Though the preachers of pessimism prattle endlessly about America’s problems, I’ve never seen one who wishes to
emigrate (though I can think of a few for whom I would happily buy a one-way ticket). The dynamism embedded in our market economy will continue to work its magic. Gains won’t come in a smooth or uninterrupted manner; they never have. And we will regularly grumble about our government. But, most
assuredly, America’s best days lie ahead.".
For everyone's sake I hope he is right.
I take this opportunity to wish you an enjoyable weekend
Savio