It’s very tempting to chase AI and “Mag 7” gains, but your long-term returns are ultimately determined by the price you pay. With the S&P 500 trading near 25x forward earnings and the Shiller CAPE ratio flashing warnings similar to the 2000 dot-com bubble, the market is lofty territory. History is clear: investing at such elevated valuations drastically lowers subsequent 5 and 25-year returns. While FOMO is powerful, be cautious. As a long-term investor, focus on the risk of what you could lose, not just what you might miss
S&P500
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S&P 500 Faces a Litmus Test
The labor market is clearly slowing. The “stag” in stagflation is here – what’s less clear is the “flation” component. With respect to growth – we see slowing in housing, consumer spending and now job creation. The payrolls data was nothing shy of a disaster. And whilst the headlines will report on the dismal 73,000 jobs added (well below the ~140K job additions expected) – the massive 258,000 negative revisions over May and June is cause for concern.
15%+ Tariffs Are Not Reason to Cheer
The market is cheering the “better than feared” trade deals with the likes of Europe and Japan. Yes, 15% is better than 30%. But 30% would be an embargo – not a tariff. 15% will not be good for global trade. Growth will slow; consumption will fall; resulting in fewer jobs. Trump’s terrible tariffs will be at least ~12% more than what we had at the beginning of the year. This consumption tax will need to be paid by someone… just a question of who. The market is not pricing this in….