Money For the Rest of Us

In this off-week bonus episode of Money for the Rest of Us, we look at the possibility that current U.S. stock valuations are justified and the market is not overvalued.
Topics covered include:
Two ways to measure P/E ratios and which is more accurate
How record profit margins are affecting P/E ratios
How concentration risk is at an all-time high for U.S. stocks
How the stock market's direction will depend on whether profit margins expand, contract, or stay the same.
Where to invest to reduce an overconcentration in U.S. stocks.

Episode Slides
Episode Transcript
Slides, transcript, and show notes also at: https://moneyfortherestofus.com/.
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We analyze long-term stock returns when investing at market peaks and bottoms, and when stocks are cheap or expensive.
We also share what we think stocks will return over the next decade and why.
Finally, we simulate the investment outcomes for someone who invests $50 per week.
Episode Slides
Episode Transcript
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I provide a short update on Money for the Rest of Us and introduce our listener survey. All survey participants will get access to an exclusive podcast episode on my worst investing mistakes and what I learned.
Take the Money for the Rest of Us Listener Survey
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In this episode, we explore why the income we earn isn't the same as the return. We show how option income strategies work, what their historical returns have been, what drives the return, and what reasonable return expectations are.
We show why option income strategies have a positive expected return while sports betting has a negative expected return.
Finally, we look at other areas where we confuse income with the total return.
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Show Notes
Episode slide deck
Variance Risk Premia by Peter Carr and Liuren Wu—NYU
Cross section of option returns and idiosyncratic stock volatility by Jie Cao and Bing Han—The Journal of Financial Economics
The Price of Correlation Risk: Evidence from Equity Options by Joost Driessen, Pascal J. Maenhout, Grigory Vilkov—SSRN
Cross-section of option returns and volatility by Amit Goyal and Alessio Saretto—The Journal of Financial Economics
The Art of Put Selling: A 10 Year Study by John Marshall, Krag Gregory, Katherine Fogertey—Goldman Sachs
Low Stress Bets
Related Episodes
557: Don’t Fall in the Dividend Trap
549: Why Catastrophe Bonds Are Yielding 12%, and Should You Invest?
544: Sports Betting Is Not Investing
Article: Tail Events and Tail Risk
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Bad actors will use AI to disrupt the financial system, transportation networks, and utilities. We should prepare now for this inevitability. We share how in this episode. We also explain why the bull market in gold will likely continue.
Topics covered include:
Why the OpenAI agentic AI breach is so disturbing
How do we prepare for cyberattacks
Why gold should be one of the assets we hold apart from the financial system
How the historical relationship between gold and real interest rates has broken down
To what extent are central banks selling dollars to buy gold
How gold ETF flows influence the gold price

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Get the free guide from NetSuite: Aligning for the Agentic Era: How AI Is Changing Everyday Work
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Show Notes
Episode 564 Slide Deck with Charts
Gold's Run Isn't Yet Done - Bhanu Baweja - Financial Times
Brief independent investigation of agents’ behavior, reasoning and collaboration in the OpenAI / Hugging Face hacking incident
Are Central Banks Moving Out of Dollar Assets? - Linda S. Goldberg, Oliver Hannaoui, and Sneha Parthasarathy - Federal Reserve Bank of New York
Related Episodes
541: Debasement Fears or Meme Fever? What’s Driving the Gold and Silver Rally
563: Why Interest Rates Keep Rising and What to Do About It
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