So right now the PE ratio of the s & p 500 is 26 or so. That number on average historically around 15.5 if I remember correctly. Meaning it would take 15.5 year’s profits at current profit levels to pay for a stock you buy. Ie, if a share was worth ten dollars, it would take 15.5 years for the companies to all make enough profit to cover the price of ten dollars for all the shares.
So that’s average. We are now at 26 or more. So it now takes 26 years. Meaning, the stock market is TOO EXPENSIVE. This is a great thing for the boomers living off selling their shares. Just like with their overpriced homes, they are enjoying this situation.
Those of us working and BUYING shares are not. We can buy less percentage of a company for more money, and expect poorer returns on what we invest today. Same as with houses. We can buy less home for more money. Long term, means we will either have to work longer, or somehow live on less when we are unable to work anymore as we age.
So if you tell me we can perhaps get universal healthcare AND enjoy the benefit of stocks returning to reasonable levels enjoyed by previous generations, I’m now even more excited thinking about universal healthcare.