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Matheus's avatar

You're ignoring the improbability of raising rates (https://www.nzscapital.com/news/the-improbability-of-rising-rates). With 3% 10y government bond, a 4.2% ERP (the LT average according to Aswath) and a mere perpetual 2% growth, a nineteen times earnings multiple is perfectly well warranted. You're likely to make a low single digit return on your cash (at best, rates these days have this characteristic of being set to 0) versus making 6-7% return buyin business américa.

I like this website (https://www.currentmarketvaluation.com/). The market remained above average for 20 years between 1955 and 1975 according with their heuristic.

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