A man named Josh Brown says that stock prices are high because there aren't enough public companies for people to buy shares of. He says that many companies have stopped being public and now they are private, so there are less places for money to go. Also, some big companies like the ones in the S&P 500 are buying their own shares back, which also makes it harder to find stocks to buy. This means that people have to pay more money for each share of a company because they are so popular and there aren't enough of them. Read from source...
- The author fails to acknowledge the role of central banks in artificially inflating stock prices by injecting liquidity into the market through quantitative easing and low interest rates. This creates a distortion in the valuation of public equities and makes them appear more attractive than they actually are.
- The author also ignores the potential risks and downsides of buyback programs, such as increased leverage, dilution of existing shareholders, opportunistic insider trading, and misallocation of resources that could be used for innovation and growth instead.
Given the information provided in the article, it seems that there is a strong case for buying stocks with high valuations due to the scarcity of public equity. The supply of public equity is shrinking faster than ever, which means that there are fewer opportunities for investors to buy shares at reasonable prices. This also implies that companies with good fundamentals and growth potential could benefit from this trend, as they will have more pricing power in the market. Additionally, the fact that private equity is sitting on a large amount of capital that can be invested indicates that there could be more competition for public equities in the future, which could further drive up their prices. Therefore, one possible investment strategy would be to focus on high-quality companies with strong growth prospects and robust earnings potential, as they are likely to outperform the market over time. However, this also comes with higher risks, as high valuations can make stocks more volatile and sensitive to changes in market sentiment or economic conditions. Therefore, investors should be prepared for possible drawdowns and adjust their portfolios accordingly.