From January 30th, 2017 client presentation.

Valuation is NOT a very good market timing tool. In other words, the market is not going to turn and head down JUST BECAUSE the P/E ratio is high. And, high valuations are NOT actually as high as they look. Because, in 2018 two BIG things happen.

1. 2008 (a really, really bad year for earnings) rolls off as a comparison and we add 2018 (which looks to be a very, very good year) earnings, and 2. The corporate tax cuts will give 2018 an additional positive boost to earnings.

Previously: Earnings Drive Stock Prices