No. of Recommendations: 7
I do, too. 10-12 years as well. Many indicators are saying that: forward returns vs P/E, P/S, CAPE, market cap/GDP, non-farm market cap/gross value added (Hussman), non-farm equity/debt (https://fred.stlouisfed.org/graph/?g=qis), GMO's proprietary model, etc. All of these are forecasting zero to negative stock market returns.True, but having tracked many of those metrics myself for quite some time, I can attest that these indicators have been predicting this for many years while the market continues to rise. How much longer could that continue? Another 5 years? Another 10? More?
I've never been one to believe "this time it's different", yet the more I ponder on what a potential future could look like if a US-led AI boom truly does spark a new industrial revolution marked by enormous increases in productivity and business earnings as some predict, the more I find myself having doubts about the merits of sitting on even a modest cash pile or hedges, and more and more concerns about potentially missing out.
I find myself questioning: what if currently elevated valuation ratios across the market are accurately reflecting a coming wave of earnings surges driven by AI in the next few years?
...Meanwhile the devil's advocate in me questions if my sentiment is just a symptom of the late stages of bubble bursting, where the unwashed masses feel panicked to get into the stock market for fear of missing out, only to be left holding the bag soon after when the bubble pops...
