“It takes a bit of work to maintain optimism about the US. I’ll give the last line to another Texan, the late author and political journalist Molly Ivins, who said, “I’m optimistic to the point of idiocy.” I am, too.”
– Robert Bryce, in his essay, Five Reasons to be Bullish on the United States
Last Month, we gathered with some valued clients for a live discussion of our investing philosophy. This month, we marvel at the incredible advantages we enjoy here in America.
Save the Date for January 30th
We have been publishing our Great Investors article series for over 10 years now, and this series has consistently been our most popular content every year. We thank our loyal readers, and we truly appreciate your comments and feedback over the years.
As you know, we have changed the format for our Great Investors series from a monthly written commentary to a quarterly webinar format. We will deliver a brief talk, summarizing our outlook on current events, delivered in the same style you have come to appreciate in our monthly article series. We will then have ample time for Q&A and discussion, in order to address any additional questions you may have.
Our next webinar will be held on Thursday, January 30, and will be available via online live stream and in-person for those who can attend. Please save the date, and more details will be available soon!
The Market is Overvalued?
Every time the S&P 500 makes a new high, there’s a fresh outbreak of wailing and gnashing of teeth in the media about valuations being stretched. Given the fact that the S&P 500 continues to break through new record highs, it is only natural to make the case that the market is overvalued. Unfortunately, valuations have never in recorded history functioned effectively as a market timing tool.
The next time you feel this anxiety about overvaluation coming on, you may be able to calm yourself somewhat by considering four numbers. The first two are 9.5% and 14.5%, which happen to be Bloomberg’s consensus estimates of S&P 500 earnings increases for 2024 and 2025, respectively. The other two numbers are 4.9% and 6.0%, which are Bloomberg’s current estimates of revenue gains for the two years. All four of these numbers are even higher than they were 90 days ago.
From our perspective, those kinds of earnings gains on these types of increased revenues suggest to us that the great American companies are doing about as well as we can ever remember seeing them do and that this may continue for a while. It is also worth mentioning that money market fund assets recently hit a new all-time high at $6.3 trillion, which we report with great delight.
Five Reasons to be Bullish on the United States
Regardless of your politics, it is difficult to avoid becoming caught up in the constant barrage of negativity we have been exposed to over the last few months. Every 4 years, our various political candidates engage in a public dialogue about the challenges we face as a nation, and how they intend to fix them. It is hard to make it through that process without becoming at least a little discouraged about the future of America, given the problems we face.
Despite the challenges we face, there is good reason to be incredibly bullish on the future of our great nation. Author, Robert Bryce, does a much better job of explaining why in his recent article on the topic. We strongly recommend this short read and hope it provides you with a much-needed shot of optimism.
Helping Those You Care About
Over the last few years, the faith of all long-term investors has been severely tested. As must happen every few years, we were basically required to do just one big thing: reject the idea that “this time it’s different,” and hew to the belief that “this too shall pass.” We must not doubt that we’ll get many additional opportunities to practice patience and discipline in the years to come.
Successful investing, while always fundamentally simple, will never be easy. You may have a family member, colleague, or friend who perhaps did not fare as well during the 2022-23 bear market, and who you feel might have benefited from the sort of advice you were receiving. Should that be the case, we would certainly appreciate your introducing us to them. We very much enjoy working with you and would welcome the opportunity to offer the same level of planning and service to people whom you care about.
You are more than welcome to bring a friend or family member to our event on January 30th or to share the recording of our discussion that night.
Thank you, most sincerely, for being our clients. It is an honor and a pleasure to serve you.
All the best!