macrocephalopod

60/ And also, the QSBS rules which could be the most significant part of this thread that no one understands. Google it, taxes usually have more of an impact than any of this stuff.

61/ Maybe we’ll all live to 200 and be teleporting to Mars. But you have to recall that our historical results included plenty of innovation too like railroads, cars, telephones, internet, antibiotics, and @taylorswift13 .

62/ So, this low bond yield environment could add one or two percentage points to real earnings growth. That would take real returns from 0-2% to 1-4%. Still not great. (My friend @hussmanjp would interject here with some discussion on profit margins I imagine…)

63/ You don’t have to invest in the mkt cap weighted passive index. There are pockets within the US stock market that offer opportunity, such as low valuation, high cash flow companies distributing cash to shareholders via dividends and net buybacks (aka shareholder yield).

64/ If an innovation renaissance were the case, I would much rather own stocks in foreign stock markets, where the starting conditions are flipped with low valuations and higher dividend yields.

65/ Foreign developed has an average country valuation of 22, with emerging markets at 15. (and the cheapest bucket is at 11!) Dividend yields are much higher too.

66/ But it’s also helpful to fathom the bear case too. What if US stocks don’t just go back to average valuations, but sail through them? What if inflation ramps and growth stalls out?