I am saying this to you as someone who is wishing you success in your investments. Your perspective on valuations and on free markets is warped and incorrect. I am not criticizing you, but there is no way to sugarcoat it.
Firstly, valuations are never fixed. They are always relative. So if investment A gives you 4% return, but it is not guaranteed, and investment B gives you 0.8% but it is guaranteed, then the right thing to do is to make a risk/reward decision and choose if the guarantee is worth it at a 80% discount. The wrong thing to do is to say that well, 4% is a lot less than 6% that used to get, because guess what? The 0.8% is also hell of a lot less than what you used to get.
Secondly, free markets do not care about valuations. They care about supply and demand. There is a ton of money being supplied. You don't get to have a say on that. But the Fed has pretty much told you that this supply is not going to dry up anytime soon. They are in plain English telling you to take the free money please! And you are saying, no to that? On what logic? The supply and demand and not some fixed notion of valuation decides the prices in free markets. To think that money supply is not part of that equation is to have no appreciation of how modern economy works.
As I said in a previous post - money, like water, has to find a place to flow into. And there are only 3 places it can go to. The flood of money is going to push the prices higher whether you like it or not. An analogy is this: deserts are not as dry as most people think. At certain times of the year, many deserts get torrential rains. During those times floods and mudslides are common. You are standing there in front of the flood and saying that deserts must be dry so you are just waiting for the rain to finish before you act rather than taking advantage of the free water that you are getting in the middle of desert. |
