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Another thing to look at is the CAPE ratio. Even now, it's still above 30. We've gone from around a 37 to a 32. Mean/median is in the 16-17 range. DotCom crash in 1999 topped out at around 44.

Still a lot of room to fall.



Also known as the Shiller PE ratio, https://www.multpl.com/shiller-pe


The historic average for interest rates is considerably higher than it is right now.

Considering the amount of public debt outstanding - it's extremely unlikely we're returning to those levels of interest rates long-term (short-term I suppose anything can happen).

Interest rates have a huge effect on P/E. I wouldn't expect CAPE to match historic trends if interest rates don't.


1. Nominal interest rates are pretty normal right now. 3.3% on a 10y, that's not bad in history.

2. The government's debt is fixed. Only new deficit is on higher rates.

3. Completely agree, my thesis is that interest rates are going to continue to go up (IMHO 4%, 4.5%)


> 2. The government's debt is fixed. Only new deficit is on higher rates.

This is not that relevant because the government is completely dependent on borrowing new money to pay of old debt.


US government can’t afford 4%. Rates will rise until something breaks, but 4% will be transitory if it gets there at all. My bet is things break sooner than that.




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