We're not looking at valuations in a vacuum. Investors can go to cash, bonds, commodities, real estate, private equity, equities, or other asset classes like collectibles. Cash is no longer trash. You're earning a higher return on cash, there's not this impetus to get out of cash and into something else.
At the end of the day, asset classes are always competing for participants' money. The question is where is our money going to be treated best on a risk/reward basis?
That's not a stretch. It's like a roller coaster where things start to go down, and then they go down all at once and you didn't see it coming.
Savings rate in US was lofty in 2021 during Covid when we were all shut in, hitting a high of 20-30%. It's been coming down. What's alarming is that savings levels have come down to what they were in 2005-2007. We know what happened after that.
He's not trying to be an alarmist saying a recession is on our doorstep. What you are seeing is companies like those mentioned saying that the consumer is not willing to spend the way they were before. Revenge travel is not as buoyant as it was last summer. So, what does that all mean?
Without a doubt, one of the best investments you could have made. Management is unbelievable. Sound business, wonderful balance sheet. As a value investor, does he really wants to pay 35-40x earnings for the hope that the past will repeat? Much steeper incline at that valuation to repeat the same sort of return.