1/ There are a lot of investment sayings that get repeated by individual & professional investors alike.
One I hear parroted over and over again is a variation of “high stock valuations are fine since interest rates are low”.
But did you ever stop and ask, “Is that true”?
2/ This thread was inspired by a tweet poll I did a few years ago, in which I asked, would you still own stocks if they reached 10-year price to earnings (CAPE) ratio valuation multiples of 50-, or 100-times earnings.
3/ And I was shocked, but most said they would still own stocks at 50, and many (a third!) said they would own them at essentially any price (100).
4/ This had me scratching my head as it sounds totally insane.
Most investors use a value approach when it comes to buying assets like cars, houses, etc.
How long would you spend before buying that new 80-inch TV? (OK maybe less now with @wirecutter)
5/ But time spent to think about investing your life savings?
Many are just willing to clickautoinvest into stocks at any valuation level.
Historically investing in stocks at sky-high multiples is a horrible, terrible, no good idea.