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Bitcoin Is Telling Us The Stock Market Is Not Overvalued
Join us at the Independent Investor Summit in NYC on September 12th!
Markets are breaking records. Public equities are outperforming. And individual investors are driving it all. It’s officially the rise of the retail investor.
On September 12th in NYC, I’m hosting the Independent Investor Summit — a one-day event built exclusively for self-directed investors.
We’re bringing together some of the smartest public market investors I know for a full day of macro insights, market predictions, and one-on-one fireside chats. Speakers include Darius Dale, Jordi Visser, Jeff Park, Chris Camillo, Tom Sosnoff, Jon & Pete Najarian…plus more to be announced.
Pomp Letter subscribers can use code POMPLETTER50 for 50% off GA tickets if you register here by August 8th. See you all there.
To investors,
The stock market continues to fly higher and the pessimists are screeching that everything is overvalued. And the bears have plenty of data to point to as part of their case. Creative Planning’s Charlie Bilello recently pointed out the “S&P 500 is now trading at 3.15x sales, its highest valuation in history.”
This should be concerning to investors, right? Not so fast. There are a number of considerations worth unpacking. For example, the US stock market is denominated in dollars and those dollars have been debased at a much faster pace than what the public has been told over the last 50 years.
“Fiat currencies are in an eternal bear market. No economy has maintained an average inflation rate below 2% since the end of the gold-backed Bretton Woods system in 1971. In other words, the value of fiat currencies has fallen by at least 2% annually over the last 54 years. For example, the US, Canada, China, and France have averaged around 4% inflation over this period. Meanwhile, Brazil, Argentina, and Venezuela have seen their currencies collapse by nearly 100%.”
Yes, you heard that right. The United States has actually been debasing the dollar at 4% a year for over 50 years, which is double the Fed’s target of 2% inflation. And we know the dollar has been debased by 30% since 2020, so you would expect stocks to trade at a higher premium to account for this monetary phenomenon.
Quite literally, investors are using stocks as an inflation hedge. That inflation hedge trade will drive valuation multiples higher, which is exactly what we are watching happen. But before you get nervous and start dumping your US stocks, it is important to know the United States is dominating on the global stage.
Alec Stapp highlights that 22 of the top 25 largest companies in the world are American right now.
A16Z’s Katherine Boyle points out there has been significant change over the last 25 years. Back in 2000, Katherine shows only 3 of the top 10 largest companies in the world wer
Published on 2 weeks ago