How To Invest During a Bubble

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.

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 Sponsors Get the free guide from NetSuite: Aligning for the Agentic Era: How AI Is Changing Everyday Work Delete Me – Use code David20 to get 20% off Our Premium Products Asset Camp Money for the Rest of Us Plus See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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 See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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. Sponsors Money for the Rest of Us Retirement Investing Cohort Delete Me – Use code David20 to get 20% off Our Premium Products Asset Camp Money for the Rest of Us Plus 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 See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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