The Problem with High Stock Valuations

Ben, could you do a video about (global) government debt ? Thx

To be honest 'high stock valuations' sounds to me like timing the market and will guarantee suboptimal returns.

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

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!

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 ❤

What is the best strategy to take advantage of the current market. I’m still deciding whether to diversify my $400k stocks portfolio? how do I redistribute stocks in my portfolio to hedge against crash?.

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.

Basically useless video. Nobody ever worried about high valuations of value stocks

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

this is tech bubble 2.0

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!

Just to add to that, I think the fact that many Western investors have exited from China is very likely to increase stock valuations, as the money needs to go somewhere.

Do valuations matter anymore? Does any data matter anymore? The stocks literally only go straight up regardless of the data.

You are largely correct, but partially wrong. Market timing is a fool’s game. But so is betting on sectors or even sub sectors of the market or the economy. Favoring value over growth, or small cap over large is just such a bet. Extrapolating that to betting on international now is also a fools bet. Inefficiency in the international, especially developing markets, and currency speculation make this a bet that worked 20 years ago. Keep playing that same roulette number, it’s bound to come up again.
But what do I know. I’ve only been doing this for 50 years.

British stocks are really cheap, almost like Chinese stocks but without geopolitical risks. So many opportunities among value stocks.

Lex is that you

I dont care if the market is overvalued or under , i care about the value of an individual business

"A well-diversified portfolio of stocks", would a portfolio of 35% international, and for the US side of 65% at least 20-25% in value stocks and a spread of index funds across the market, qualify as "well diversified"?

Not emerging markets or China 🇨🇳 it’s cheaper

Guys just buy VT or VWRA then chill

Is this a real person or an AI creation? 🤖

Hi Ben what are your thoughts on the recent talk about passive investing undermining the efficient market theory?

What is the best international market index fund you would recommend Ben?

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?

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!

What are some ETF's that capture international emerging markets?

If someone knew whether a stock was expensive or cheap, they would be billionaires in Monaco or Luxembourg

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. :)

Can you recommend good international ETF?

When stock prices are high it means we are leaning capitalist society. When people talk about earnings they are leaning socialist.

Small caps have been and remain cheap, indeed.

Are there value stock ETFs then? Or do we have to pick those manually?

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.

The Mag7 values make me sick. American markets are almost to the point of disgustingly overvalued

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.

"Messy, noisy, and can be violated for long periods of time"... 😏

I stay invested yo!

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.

I very much enjoy your content good Sir. Crisp analysis of facts and competent insights. Keep up the good work!

Great as always

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 timeframe

I don't think people really model out or take seriously what that would look like economically

I 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 public.

With 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 survive

I know there's a strong bias against "this time is different" but maybe.. this time IS different

Not just the ability to automate people, but the ability to automate any task at a freakishly low cost is fast approaching

Life spans could extend 10-15 yrs

I just don't think the traditional logic necessarily holds up

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.

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.

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

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.

Great video

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!!

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!