Investing in the Age of "Overvalued" Stocks & Homes with Nick Maggiulli

The Money with Katie Show

Money with Katie

Self-improvement, Education, Business, Investing, How To

4.8 • 1.3K Ratings

🗓️ 13 April 2022

⏱️ 31 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Today, my friend Nick Maggiulli (COO of Ritholtz Wealth Management & former data scientist, as well as author of Of Dollars & Data and his new book, Just Keep Buying) joined me to talk about something that’s been (justifiably) freaking me out a little bit lately. To boil it down to its most layman's terms is the government’s money printing the reason why stocks and homes are worth so much more now, and does that mean we’re headed for a crash? More to the point: What the hell do we do about it? I think you’ll enjoy the little history lesson throwback (Kansas farmland in the 1970s, anyone?), the explanation of quantitative easing and expansionary monetary policy (I wish my Econ 101 professor could see my B+ self now), and—most importantly—the conversation I had with Nick about what we’re supposed to make of all this. Here's the Politico article referenced. Point of clarification: We reference the S&P 500's PE ratio (25 as of this recording) and Shiller PE ratio, or CAPE ratio (36 as of this recording), in this episode, and (somewhat confusingly) switch between the two in the conversation. Nick originally describes the CAPE ratio, and then I ask him his opinion of the current PE ratio. FOLLOW ALONG Money with Katie Blog Money with Katie Instagram Money with Katie Twitter Sign up for the Newsletter! FULL EPISODE TRANSCRIPTS AT HTTPS://PODCAST.MONEYWITHKATIE.COM Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

Click on a timestamp to play from that location

0:00.0	Welcome back rich girls and guys to the Money with Katie Show.
0:10.8	I have a confession to make y'all.
0:13.5	The more I learn about money and investing and macroeconomics in general, the more I realize
0:20.5	that I don't know shit.
0:29.3	So I think it's good to be regularly humbled and cut down to size, but there is one buggy
0:36.3	man, so to speak, that's really been tormenting the back of my mind in the months since the
0:41.4	pandemic.
0:42.4	And it's this idea that stocks only have crazy valuations right now because the central
0:49.0	banks have added so much money to the system.
0:53.2	Now that is an oversimplified way to describe what's actually happening no doubt, partially
0:57.8	because if you were to literally hold a gun to my head and tell me to perfectly explain
1:02.2	what's happening, I don't actually think I'd be able to.
1:05.8	It's kind of challenging though to reconcile this historic faith in the stock market and
1:11.2	its relentless climb upward with the reality that so much new money has been added in recent
1:16.6	years that it almost feels like we're in the midst of something different now that the
1:21.7	reality we're living in is somehow different from the past and that maybe our confidence
1:27.4	is misplaced.
1:29.4	So let me describe in the most basic terms with a little analogy what it feels like is happening
1:35.9	right now.
1:36.9	And remember, this isn't necessarily perfectly accurate, but this is in my head how I'm
1:42.0	conceptualizing it and what I really wanted to take a deeper look at today.
1:46.7	Okay, so there used to be X dollars in the system and those X dollars were allocated across
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Money with Katie, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Money with Katie and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.