The Problem with High Stock Valuations
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- Опубликовано: 22 янв 2024
- Meet with PWL Capital: calendly.com/d/3vm-t2j-h3p
References: zbib.org/17df87b9e17b4e6683b6...
I’m noticing investors being worried about stock market valuations. When stock market valuations are higher, expected returns are lower. High valuations are not great for long-term investors. But saying that stock market valuations are high misses a lot of nuance. Which stocks are we talking about, and even more broadly, which markets?
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You made a video in September 2017 telling us to not worry about investing then, in a time when prices seemed too high, and since then the S&P 500 rose nearly 100%. This is some of what you told us:
"During periods like this, investors will usually worry that the market is too high. Fear of investing at the top of the market might deter them from investing at all, instead choosing to wait until markets drop. The problem with this thinking is that we are not able to predict the future. If markets continue to rise from here, you will have left gains on the table. And even if markets do drop at some point, how will you know when to buy in? Successful market timing is no easy feat, and there is no evidence that it can be accomplished consistently"
Your content was always great, but you did become much better at making videos. I wish you still released videos as often as you did. Thanks for all the teachings!
*Charts M2 over SPY*
Totally organic market valuations!
@@darnold1984can you explain? Was this a sarcastic remark?
@@millenialmusings8451 boglehead zealots like Ben won't admit that the explosion of the indexes has been directly correlated with the expansion of the money supply...central banks across the globe have been directly responsible for pumping your bags while diluting real purchasing power in the process
"Don't time international and value exposure", got it. 3x leveraged AVDV and AVEM.
3x those are rookie numbers. Gotta pump that way up 😂
Yea, really, where are those leveraged small cap value stock ETFs when you need them? I guess will have to settle for EURL and such.
@@krdxz I "leverage" my small value/Intl by using SSO (2x S&P500) to concentrate the large cap exposure into a much smaller percentage of the portfolio, which frees up much more of the portfolio for small value/Intl/etc. SSO has a much lower volatility decay than most other leveraged ETFs.
*AVES
I'm still looking for the ex-US multifactor 2x leveraged etf, something like VXUS/VSS meets AVDV/AVEM/AVES meets NTSI/NTSE. 😂
Ben - the voice of reason
This honestly shows how detrimental home market bias can be, plus It's so fun to look beyond to the markets in other countries to see what's going on there. Great video!
The US has _smashed_ International over the last 100 years. It’s not even close. Call it bias if you will, but I speak the facts.
I think it's less home market bias than past performance chasing and simply recognizing how exceptionally robust the US economy is. It really is quite exceptional and it's not just yanks buying into it market weightings
Thank you Ben!
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.
I very much enjoy your content good Sir. Crisp analysis of facts and competent insights. Keep up the good work!
So good to have you back, Ben!
I'm 50% in value stocks. And across my large cap/small cap value...I'm 50% US, 25% Emerging markets, 25% developing markets. Wish me luck!
Me too!
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 you.
Unfortunately 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. :)
What a great video! One of your absolute best with extremely concise and apt description of the current situation.
Great stuff as always
Sound info as always.
Need more peeps like Ben in the Industry!
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!
Another excellent video. Thanks !
Great as always
Great video. Could you please ditch the semi-transparent background on charts and always add (at minimum) axis labels to charts?
Great video, Ben! Please make more content on risks and valuations in the future.
Excellent video! Thank you!
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.
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.
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.
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.
The problem is that it is easy to say this afterwards, but impossible to predict.
@@michalsladek8809 Like most things in life.
@@TerryJLaRue Yep, true. This the reason why decisions made in the past (good or bad) and their consequences usually seem now so obvious...because we know the results. But it was not so in the time when they were done...
AVUV?
@@sterlingcampbell2116 No, im an european guy, dont have access to Avantis. I have IUVL which is equivalent to VLUE in US. I would def go with Avantis if I could.
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?
😂 I hope so. I have a great marriage so the evidence is in my favour.
He's able to see everybody in the room, so he always has to be considerate towards everybody.
@@jimrobinson9979 Past performance is no guarantee of future returns and all marriage involves risk, which may be inappropriate for some investors. This comment is not intended as marital advice, and you should consult a qualified marriage professional.
@@BenFelixCSIrelationship bias
5:12 Put another way, asset allocation is the biggest determinant of returns.
Nailed it.
Hi Ben,
I am part of a condo union and would like to get some knowledge on how to manage our contingency found.
Some questions that I have : Should we invest with a short or long term strategy in mind ?
High or low risk ?
Is a low cost ETF diversified portfolio the way to go ?
Thanks for your content, I love the way everything is backed up by papers and somewhat uncertain. GG ❤
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?
In my comment, I meant the US S&P500 index. Sorry for not being specific, and thanks for the video!
Great video
Thanks Ben... Do you have some typical allocation in percentages for long periods (with etfs/mutual funds) to be used from Europe that can consider the high valuation of USA?
I am DCA investing in international stocks (using mutual Ucits funds) with smaller exposure in percentage to USA (30%) than typical global funds maintain and other regions as follow:
(Japan(5%)/Europe(7.5%) /Asia not japan(4%)/Emerging(10%)/small caps global (13%)/bonds(22.5%)/gold(8%). I am thinking of weighted SP&500 etf instead of cap weighted (I cannot find mutual funds of that type in Europe) for the USA percentage... I am also having difficulty to find value mutual funds so I may think of value etf too which may go 10% in allocation??? Reducing previous regions/assets proportionally... Global value probably to avoid excessive number of funds. Is it enough the value and small caps tilt of 23% to have reasonable exposure to factors? In general factor etfs are very expensive... At about 0.5% expense ratio yearly for value and 0.3% for small...
...one remark - if you go for small caps, you need to take small AND value if I am not mistaken. As just small caps performed badly in the past unlike small&value. In Europe there are available ETFs tickers ZPRX and ZPRV. I did not find any single one which would cover global small&value...
My God you are over complicating this lol
Hi Ben, could you talk about managed futures ? The ETFs available now (e.g. 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, i.e. short market and long momentum). But I'd love to learn more on the topic.
I would love to try out DBMF later this year but the constant market volatility and diff manipulations by big sharks makes me scared.
@ hunantrain - Though the market isn't as stable as it used to be, it isn't as bad as people think. With the right techniques & knowledge, one can easily earn so much profit from the market in a day, do your own research.... Believe me or not as a beginner who knows next to nothing, I am about +65% up just in a couple of months... I'm retired and I am using these extra funds to help pay for odds and ends that I want.
Hi Monique Carrol, your profit margin is quite inspiring and stunning for a starter; do you make use of spreadsheet, what is your top holding
@ kentucky - NO I don't.... Spreadsheets have always seemed incredibly stressful and of no relevance to me.. I mirror Kelly Marie Matwick's positions in real-time, and I am very okay with it because it's very transparent, easy and automated... You can give it a try.
Ben, I would like to see you do a video on BDCs and private credit!
Youve read my mind!
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.
Great video Ben.
Though isn't saying "value stocks aren't overvalued" a bit of a tautology? They wouldn't be value stocks if they were overvalued.
Value is always cheaper than growth tautologically. But value can be cheap or expensive relative to its own history.
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!
What would you recommend for an American investor. If the US market is already 61% of market cap, do we just stick to market cap weights or do we go above that to reduce additional risk, like currency, political, economic and so on? Every other country overweights their own market for currency risk, so should US investors do that too? I like the idea of just buying VT but worry about the 40% in addition taxes and currency exchange rates.
I think that's very sensible. A low cost, globally diversified ETF is unbeatable.
Just stick with a US only portfolio. International stocks will likely drag you down
@@DekarNL I doubt there has ever been a period in the history of the world where a global market cap index has outperformed every other index, and in general the US stock market has tended to overform it by quite a lot, so 'unbeatable' is a very imprecise world to use I'd say.
Personally, I hold both VT and VTI to tilt a bit off of globally diversified. I personally prefer this approach rather than owning VTI and VXUS because having owned VXUS for the past decade has been nothing other than depressing. Owning the world and US separately has proved more behaviorally manageable than owning the world-EX US and US separately.
I stay invested yo!
what are all those books about behind you?
Hi Ben, what do you think about the argument that increased access to investment tools (due to digitalization, low-cost index funds etc.), has resulted in a rapid increase in stock demand, leading to a systemic shift to higher valuations (I know, as you said, that most stocks are not expensive, but I also would expect that the market-capped nature of most portfolios would specifically manifest this effect on the largest heaviest companies)? Is there any ground to consider this a reasonable argument? Is an effect of this type even compatible with a capital asset pricing framework?
I would also really like to see this explained, if someone has some reference papers please share them :)
The market cap weighting can't in itself be the cause of megacaps getting expensive, because market cap weighting by necessity maintains the relationship between all evaluations. You could perhaps say that people systematically weighted against market cap before, but I don't see why that should be the case.
We might be going towards a world where valuations are systemically higher, but more than investment tools, I'd say wealth inequality is a bigger factor. There's only so many investments for large amounts of capital, and wealthier people tend to have a higher proportion of equities in their portfolio.
Systemically higher valuations could have some effects on investing (like more interest rate sensitivity), but it's not the end of the world, and has been gradually happening since the 19th century.
@@Earth3077 I don't have the numbers on whether the world/US is more unequal today than it was 100 years ago, but it would make sense that wralth inqeuality could increase valuations. That said, it's perfectly possible to deploy large amounts of capital into smaller companies through ETFs etc. They might choose not to, but it is possible to do.
I think from the perspective of people being risk averse and demanding a risk premium it makes a lot of sense that valuations have increased with time. 100 years ago we didn't have 100 years of stock market history telling us that stocks outperform bonds, so stocks were or at least were seen as more risky and thus demanded a higher premium. The longer we go with stocks outperforming bonds the more narrow I'd expect that gap to get as people buy the outperforming asset.
But, it really is quite a catastrophe to aspireing investors. The amount of money that companies actually earn relative to their valuation has been a huge part of the difference between stock returns and bond returns / inflation. As valuations systematically increase, the price appreciation that an investor can expert over their lifetime decreases *exponentially*.
Nick Colas, who studied at UC Booth (where Eugene Fama is a professor), said that the multiple expansion of US equities can be explained by the tech + communications sector being a larger part of the SP500 - around 40%, compared to around 15% of EAFE. Not sure it justifies a forward PE of 20 vs 13, respectively.
Whether there's something really special about those sectors (network effects + economic moats) remains to be seen - maybe in the future they'll discover a new statistically significant "tech factor," which will be arbitraged away upon publication.
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.
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)
Hi Ben, like your videos. Would dollar cost selling out of mag7 positions into value stocks be a reasonable way to reduce risk while not specifically trying to time a transition to value? plus how can one avoid value traps ?
If I had A LOT of capital invested into Mag7 then I would DEFINITELY try to hedge the risk by adding value stocks (international stocks).
Dollar cost selling / averaging is just another form of market timing.
Don’t worry about ‘value traps.’ Just think about rebalancing into a portfolio comprised of low fee broadly diversified etfs with sensible allocations into the broad international market (market weights) , value stocks (weighted by size , value and other fama French factors ) and global bonds. Your allocation should be suitable for your appetite for risk , allowing you to stay invested long term and this allocation should possibly evolve with you as you get older and life circumstances / attitudes to risk change.
Be honest with yourself about your attitude to risk , and don’t just use it as an excuse to time the market under the guise of rebalancing due to shifting risk tolerance. Coming up with rebalancing rules or asking an expert to help gauge your level of risk tolerance and think about your future financial goals may be worth while.
The decision to move from a more concentrated portfolio into one that’s more broadly diversified may feel like market timing right now because valuations are so high, but ignoring valuations it is still a sensible decision and is backed by the best evidence and theory that exists in the financial literature. Just do it 👍
Avantis AVGE might be something for you.
@@stiffeificationor AVGV, bigger value tilt.
Rip off the bandaid vs DCA is a personal decision.
Funds from Dimensional and Avantis tilt toward value and profitability to avoid value traps.
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
It's crucial to have a well-thought-out strategy and not make impulsive moves based on short-term market fluctuations. Patience and a long-term perspective are key. You should consider a market expert to guide you.
Accurate asset allocation is crucial, and some individuals use hedging strategies or allocate part of their portfOlio to defensive assets for market downturns. Expert guidance is vital for achieving this. This approach has helped me stay finan-cially secure for over five years, yielding nearly $1 million in returns on invest-ments.
Please can you leave the info of your lnvestment advsor here? I’m in dire need for one
*Kaitlin Rose Sternberg* is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
I looked up her name online and found her page. I emailed and made an appointment to talk with her. Thanks for the tip.
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 )?
It is still there. The risk premiums are independent sources of return. This means that, for example, US value and international value deliver independent premiums. More independent risk premiums in a portfolio is better than less. There is also a strong argument for international diversification from the perspective of international stocks being protected from local inflation.
Thanks for the feedback! My fondamental problem is that I completely agree with you on international diversification but, and now I’m referring mainly to emerging markets, once I look at what stocks I’m actually buying there a sort of ‘illogic bias’ that stops me (and stay invested only in us). My personal experience (means nothing) tells me that whenever you buy a company is not the price that will make a good investment in 20 year time but the fundamentals of the market/ specific company so if you are buying bad (but cheap) assets this won’t result in a long term gain
@prova1113 at PWL we use funds that overweight smaller, cheaper, and more profitable stocks. I agree you don’t want cheap garbage, you want cheap quality.
@@prova1113 I mainly agree with you, but valuation matters a whole, whole lot. You could have bought into Microsoft and Coca Cola, two of the best companies to ever exist, and have had a 15 year run of negative return after inflation just due to valuation.
@@BenFelixCSIHey Ben, could you please share which books do you have behind you? can you maybe do a video about which books about investing do you like the most? or at least try to share a high-res photo or a list?
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.
There is quite a lot of research on this. Correlation is very low. However, look for how lawmakers in the US invest - now there you can find a high correlation amongst the people who set and can change the rules of the game!
Thank you Ben for bringing light on the topic.
Does someone know if value stocks are included in the European ETFs based on the MSCI World Index like the Vanguard FTSE All-World?
not the small ones
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?
@BenFelixCSI Is timing a consideration of a (partial) move into bonds?
Hi Ben, would you consider VGRO a broad index portfolio? Thanks for posting all those insightful videos I love em.
Cheers
Does this mean I should keep back on investing right now?
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.
Ben, the world's economy is becoming increasingly connected. The 120-day correlation between SPY and VXUS is rarely lower than 0.7 over the last ten years. How much does this affect your efforts to maintain an internationally diversified portfolio? Thanks and great video!!
Short-term vs long-term matters when you look at correlations. In the short term they have been increasing, but not in the long. www.nber.org/system/files/working_papers/w24646/w24646.pdf
Thanks for the link! Surprising that the authors find no evidence that the benefits of global equity diversification have declined while the benefits of global bond diversification have declined. I would think (as a US investor) that my global diversity would be more baked in but the numbers don't lie! I will try to find some more peer-reviewed articles on this subject - you sparked my curiosity with this video! :) @@BenFelixCSI
As someone invested in global equities who's seen his portfolio get clobbered by the S&P 500, I needed to hear this.
Ben, would you then suggest getting into the RSP ETF, an equal weighted S&P 500 index fund instead. I have also been avoiding the US market because I think it is overvalued, but it might largely be because of the few stocks you referred to.
If you're worried about valuations, use a value fund. Equal-weighted investing makes no sense. If I had an index with two companies, Apple and the hot dog stand outside their campus, you wouldn't want to invest equally on both.
That being said, markets are efficient, or close to it. The reason large tech stocks have high valuations is partly because they have intangibles (brand, "moat", etc) not captured by book value. The market participants that set those valuations are generally sophisticated institutions that know more than my hunches ever will. The simplest strategy is to own the whole market and let _them_ fight it out.
Absolutely do NOT go into equal weighted indexes
Any advice on global diversification will be really appreciated
Vanguards VT could be an option. Look it up.
As bad as the Japan's stock market 1990-2020 may have performed, how does that work out after adjusting for their inflation? I'm not sure and I'm too lazy to check, but I think they've had deflation all along. If true, it may turn out their stock market fared not that bad relative to purchasing power, and retirees' returns, while not spectacular, kept their wallets somewhat okay in the long run. I wonder how that compares to other countries. Is there maybe some unwritten rule, that the stock market performs X% on average everywhere, after adjusting for country's local inflation?
I'm 100% in AVUV and AVDV, so I'm feeling so smug about the conclusion.
@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??
Yo-yo market. If you like gambling maybe...
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 China.
I buy the FTSE Developed World which is mainly US.
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?
The very act of tilting based on valuations is in fact a form of market timing by another name though, right?
Does the total stock market fund capture these value stocks?
Yes, but to really capture the value premium you need to be overweight value relative to a total market fund.
@@BenFelixCSI Thanks Ben!
Are there value stock ETFs then? Or do we have to pick those manually?
Yes, IUSV and IJS are in a lot of brokers and are solid if you want to get exposure to value and small caps in the US.
And afaik, there aren't any ETFs that give you good risk adjusted returns for exposure to value outside the US.
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 U.S. market is booming. Rear view mirror bias. Looking at the P/E ratios globally is reassuring.
Both Jack Bogle and Warren Buffett have said the average US investor doesn’t need international, and their advice has been proven correct.
If you listened to some of the greatest investors and not some RUclipsr you would actually make money.
What are some ETF's that capture international emerging markets?
Hi Ben what are your thoughts on the recent talk about passive investing undermining the efficient market theory?
It’s not recent. It’s been happening for years. It’s also a fact. Not everyone can index. The thing nobody really knows is when the break point is. I have done videos on this.
@@BenFelixCSIthanks for the reply. I just saw it in the financial post today. I will look for your previous videos.
Can you show all of those graphs denominated in CA$?
Ben - how would you go about identifying value stocks? price to book ratio? price to earnings? what does the research suggest?
There's no agreement - not even on what you are trying to measure - which he fails to mention.
To be honest 'high stock valuations' sounds to me like timing the market and will guarantee suboptimal returns.
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.
You should’ve listened to Jack Bogle and Warren Buffett instead of an internet talking heads.
@@afridgetoofar1818 I’m more a Fama-French and everything that followed guy. Anyway, now is probably not the time to go all in on large cap growth USA given the recent run. YMMV.
What does it mean with "Dimensional"? Please help me to know better
Another excellent talk. Yes, "US valuations" are not all high.
I'm reminded of Bogle's famous comment (approx) that international is not necessary because there are nuggets in the US market to find. Clearly such nuggets are not the total stock market, which is already a core holding in a US portfolio. He must have had in mind things like SCV.
great intel. what's the global equivalent of the VTI?
VT is all world including US.
@@BenFelixCSIgreat intel. thank you
@@RawGuruRecordsVXUS+VTI also
What is the best international market index fund you would recommend Ben?
VXUS 😂
@@manuvns It's up only 16% since 2011. A 16% return over 13 years is garbage.
Thank you. (Curious if DCA vs lump sum has any beneficial/measurable impact considered with valuations... or if it's just a trick in the mind of a conservative investor. Always appreciate your thoughts and these videos. Keep up the great work sir!)
Im in this trap right now too. Typically happy to lump sum invest but lately I've been DCA due to anxiety about the market.
He already has videos on this topic. Basically you should always invest lump sum rather than using DCA. If you feel that is too risky, then you should modify your asset allocation instead of trying to time the market. All the benefits of DCA can be realized through the periodic rebalancing of your portfolio.
In generall it is about 2/3 vs 1/3 for lump sum investing.
Lump sum as much as you are willing, then DCA the rest. Peace of mind is important (in investing)
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?
I 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
What is (Good) Financial Advice?
ruclips.net/video/TI5p8vqdjTw/видео.html
I remember having a consultation with a financial analyst last August, and it was incredibly insightful. Can’t stress enough how helpful experts in this field are!
As long as you diversify your portfolio, any single stock or investment that you own shouldn’t have too much of an impact on your overall return. If it does, diversifying might be the right choice for you, as one can also try out other commodities. I now have a balanced portfolio that is yielding me profit with help from Jonas W Herman.
That’s awesome! I’ve been contemplating hiring one since I can’t get a hang of investing even after buying courses. I’d like a discussion with him. Any means to reach him?
Hermanw jonas (a Gma!L comm
Is he taking commissions for his services? Yes, I’m I still making money in the process? Hell yes!
I started working with Jonas back in June, and my financial goals have never been clearer. It’s like having a strategic partner for my money with a solid track record.
Thanks for the advice, both of you. It’s reassuring to hear positive experiences.
I feel more confident about moving forward with Herman now. I just shot him a mail. Thanks for sharing your experiences!
More videos Ben, empirical information is a scarcity these days.
Got it. Going all in on gas station sushi!
Small caps have been and remain cheap, indeed.
I've switched my tax-deferred assets to the Russell 2000
Wise move 👍
Ben would you say that good balance makes 70% s&p, 20% world msci and 10% semiconductor etf
...depends on your goals. It means big overweight of USA market plus bigger exposure to semi. Question you have to answer to ourself - why do you think these will outperform?
@@michalsladek8809 good thought thanks. Yeah, I believe semis are future of growth in everything and makes it worth in some smaller part of portfolio. S&P definitely as strong player and safe one I would say + 20% in world msci for defense and balance as it is highly biased towards usa. I just didn’t like historical returns of europe or other continents. Big innovations also come quite often from usa. It makes sense to me, performs quite well atm but maybe I should take another 10% from s&p and put a little bit more balance that is also outside of usa, hmm 🤔
@@HL-uw7fk Even if semi will grow a lot in future it might still deliver bad returns . The reason is that such (or even higher) growth can be already priced in now - this is the thing which is tricky. And in such case you won't get any extra returns even if semi will grow a lot. Just if, according to you, the valuation of semi now is lower than it would correspond to expected growth in the future it makes sense to invest there.
As for S&P500 and MSCI world - please note that MSCI world contains already more than 60 % from USA stocks. So even if you add more MSCI you are still adding mostly USA stocks. There is quite big overlap between MSCI and S&P 500. So for you it would be probably better to have some ETF which covers whole world except USA market.
Considering all above - I am not telling your current portfolio is bad - it can actually perform very good. You just should know what you are invested in and how it works and then decide it is what you really want
@@michalsladek8809Tell me why you think international will out perform? Spoiler alert: It probably won’t.
AVGV and chill.
Can you recommend good international ETF?
VXUS
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. 😏
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
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.
Like any other productivity improvement, it might increase earnings, but it shouldn't affect valuations, i.e. how many dollars investors pay for a dollar in earnings.
@@Earth3077 How do you increase earnings without affecting valuations?
All else being equal, investors willing to pay $100 for $10 in earnings would also be willing to pay $150 for $15 in earnings. The original investors got above average returns assuming that it was an unexpected increase in earnings, but there's no reason why the valuation (in this case, the P/E ratio of 10) would change.
Nah, already priced in. lol
ha heres me sitting in hong kong with the most depressed market at historical low valuations, i expect this to be the opportunity of a generation
Except that the HK and China stock markets are highly susceptible to political and geopolitical risks.
@@mrslcom I guess so but the companies underneath are still doing rather well.. dunno this just reminds of me of 2002, 2003 when everyone was feeling doom after SARS
Valuation "peaks" exist BECAUSE of crashes that follow them.
That is true, but the valuation vs realized returns relationship still holds if you only measure valuations relative to the past. You don’t need to know the future to say valuations are high, though it is true that valuations can always get higher.
Hard to tell when the bottom will fall out under you, but the point is when prices go up based on P/E ratio and not earnings then prices eventually flatten or fall because P/E ratios will not increase to infinity. Tortoise and hair kind of thing
In the UK here. *Stares in FTSE250*
Stares ?
@@johnristheanswer Yeah. It's underperformed badly over the last few years and has high yields currently. (I have a chunk of my money in FTSE250 index funds). Hoping for a regression to mean.
Do valuations matter anymore? Does any data matter anymore? The stocks literally only go straight up regardless of the data.
this is tech bubble 2.0
Don’t worry Ben, just watch Paul on Everything Money and you won’t have to worry about this
Lex is that you
Do those returns include dividends?
I always use total return indexes unless otherwise specified.
Don't forget that the US market has a different industry mix then other developed economies. The US have a much larger tech weighting then EU, and developing markets have much higher commodities exposure then the US does. It is fair that these different industries trade at different multiples. Have to adjust for all of that, and once that is done a lot of these markets are not looking much cheaper then the US.
Sure, but even if you adjust for that the valuation of Mag7 is… still RIDICULOUS 😂
* Than x4
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.