[clairity]

you can't make such a grandiose condemnation of "earnest misinformation" and then not make perfectly defensible arguemnts, lest you make the exact same mistake you condemn.

p/e ratios at historical highs is a statement that they've disconnected from their fundamentals, i.e., the price of a share of a company is (often much) more than the expected present value of all future cash flow for that share.

that there are no better alternative investments just strengthens the case that those p/e ratios are irrationally high for those assets, not that the strategy of investing in the best available alternative is irrational.

[AngrySkillzz]

I don't understand what you're trying to say. You can't easily say that asset prices are "disconnected from their fundamentals" - the price is what people are willing to pay for the future earnings of those companies. People are willing to pay a higher premium for those earnings now than they have in the past. Instead of the comparison to historical highs, try looking at developing countries, with lower P/E's and higher interest rates. Yet investors are still willing to pay a premium for US stocks. If you're going to say that the price is wrong, you need to account for that discrepancy. It seems that the argument you want to make is that people buy overvalued US companies because they think everyone else will continue to buy overvalued US companies?

[clairity]

i'm saying the premium you mention is the additional willingness-to-pay for those equities being the best available, not something intrinsic to the underlying business. it's on top of the value of the cash flows.

in a hypothetical market with 2 relatively correlated (similar beta) stocks, one that historically returns 10% and one that returns 2% and an expectation that those returns continue in the near future, you'd put all your money on the first stock, regardless of the price and regardless of systemic conditions.

in that scenario, you'd expect to be making your most rational choice even if you overpay severely. in the case that the market crashes, you'd lose less money than the opposite scenario. the price says nothing about the value of the underlying cash flows (the fundamentals).

this is one way economic bubbles develop.

[WalterBright]

> irrationally high for those assets

Are you shorting those assets?

Edit: is this not a fair question? Putting one's own money on the line is a reasonable test of what one's convictions are. For example, I'm optimistic about the market, and have put my money where my mouth is. Of course, that doesn't mean I'm right, but I have a level of confidence that I am.

[clairity]

that's mostly a gamble about timing, not the validity of the p/e ratio--that you can both get into and get out of a short position with sufficiently precise timing.

so no.

[leetcrew]

I think your question is riding the edge of what might be considered too confrontational on HN.

the overall sentiment is reasonable, of course. you shouldn't listen to people who say the sky is about to fall while they continue buying $SPY every other friday.