Headlines and Truths

The media often run sensational, concerning headlines that can mislead investors who take them at face value. 

The Truth About Valuation 

In recent weeks, much has been made about extended valuations, with reports noting that the Shiller P/E ratio is the highest since the dot-com bubble. 

But is valuation really a reliable gauge?  

History suggests otherwise. Since the mid-1990s, investors have repeatedly been warned about high valuations. Those who acted on these warnings often missed out on significant gains. 

The Truth About Margin Debt 

Margin debt has also made headlines this year. In August, the story was that margin debt reached a record high. Was that true? Yes and no.  

In absolute dollars, yes. But in context, when measured against the size of the overall market, it’s far from a record. Margin debt today equals about 1.8% of market cap, compared to the all-time high of 3.3% in 2008.

The Bigger Picture 

Headlines often mislead when taken out of context. Most are written to grab attention, not to guide smart decisions.  

My advice remains the same: tune out the noise and stay focused on the plan we’ve built together. And if something you read or hear leaves you uncertain, please reach out — I’m always here to provide perspective. 

©Behavioral Finance Network