RE: Are extreme P/E valuations justifiable with runaway USD inflation?
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I think it will come as a big suprise to many US dollar holders, even considering the dollar has already lost 95% of its value from 1971 and 99% of its value from 1913.
Based upon what?
Please show me a comparison between 1913 and today.
How much did people earn in 1913 compared to today? Considering the annual wage was about $700 per year, this shows how misleading this concept it.
If there is some big inflation numbers, hyperinflation as some are calling for, Earnings for these companies, measured in dollars, would get jacked up and lower these ratios drastically.
Inflation in a global collapse with declining wages? This will only accelerate the decline in the velocity of money which already plummeted over the last 40 years.
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I wasnt around in 1913 😅 but my understanding is that 1 dollar bought a lot more stuff. Today, if we earn 70,000 dollars in a year, we cannot buy 100x what that person in 1913 could buy with 700.
Of course its a much closer comparison a few decades later, when most of the cool gadgets like cars and refridgerators were being invented. Many products lasted longer then (durability) as well.
But the post is just about how the high P/Es might not be so crazy if you play with another variable like price inflation. I'm not certain how this will all shake out either (just guessing), we are already on the margin of civilization to avoid the fallout from perceived problems.