9 Minute Read

Tackle Today: Why I Don’t Care About Valuation in the Long Run

April 16, 2021

By | No Comments

It All Comes Out in the Wash

Traders,

Stocks are the ultimate wealth generator. If someone with a long time horizon asks me when the best time is to buy them, my answer is always “now.” History bears out the wisdom of this response. The longer your sit in cash, the greater your underperformance.

But what about the fact that the market currently boasts a stratospheric P/E ratio?

Eh, I don’t care.

It might lower my returns over the coming five years, but it might not. I can think of two silver linings that come with lower returns if we do indeed follow a more bearish path.

One: I get to buy more stocks at lower prices. Those of us in the accumulation phase of life root for crashes and corrections. They allow each dollar invested to scoop up that many more shares.

Two: Do you know what follows periods of below-average returns? Periods of above-average returns.

If markets suck over the next five years, then the P/E ratio will necessarily shrink, putting us into a position of cheap markets. That will, in turn, raise forward return expectations.  

And guess who will be there to collect on those above-average returns?

Me and all the other dedicated investors who keep their eyes on the prize.

#TeamTackle


Chart of the Day

Stocks Since 1900

Feast your eyes on the past century of wealth-building delivered to investors courtesy of the U.S. stock market. Remember, the advance is permanent, and the declines are temporary. Two steps forward, one step back. Three steps forward, two steps back. It was ever thus.


Video of the day

Analyzing Gold Breakout

Gold and Gold Mining stocks are breaking out Thursday, watch this clip from Thursday’s Halftime Report where the Coaches analyze the technical conditions in Gold and the potential moving forward


Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

At the Closing Bell 3:00 PM EST

Join Mark Justice each Friday as he covered the world of commodities and takes questions at the closing bell of the market.


Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

Financial freedom is a journey

The Tackle Today series is brought to you by Tackle Trading.

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

# Sign up now for a 15-DAY FREE TRIAL #


Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

Chart Modal

Tackle Trading

Book a FREE Consultation

Sign up for a free consultation to build your Educational Plan.