Is this market overvalued… or have valuations actually reached a “new era”?
It’s my opinion that a combination of increased availability of information (the internet), and falling wages and rates since the 80’s/90’s have pushed valuations to a new normal that is higher than historical norms would suggest. I do believe we will witness margin compression as wages and rates rise sometime in the future (sooner than later hopefully)… however, IMO, this would be a short-term issue that would self-correct as demand increases due to increased wages and yields. This would push revenue and earnings higher regardless of moderate margin compression.
Great read. Take a look when you can and share with your buddies.