Everything Is Relative: A Fresh Look at Market Valuation

May 27, 2025 | Season 7 | Episode 20 Take a fascinating journey through market valuation that challenges conventional wisdom about wealth measurement. In this eye-opening episode, we explore how perceiving markets solely through dollar-denominated prices creates an illusion of stability, when deeper analysis reveals a more complex reality. The real story emerges when we examine the Dow-to-gold ratio across a century of market history. From its peak of 18 during the 1929 market bubble to 41 during the dot-com frenzy to approximately 12 today, this perspective shows how relative wealth can dramatically shift despite seemingly stable nominal values. While the S&P 500 appears nearly flat year-to-date in dollar terms, a foreign investor would experience an 8.6% loss due to dollar weakness—a sobering reminder that currency matters. We analyze healthcare stocks showing promising technical indicators after five years of significant underperformance, potentially setting up a 21% rebound based on historical patterns. We also examine IBM"s surprising premium valuation compared to its historical discount and Google"s existential challenge as younger users increasingly "ChatGPT it" rather than "Google it." Looking toward future market leaders, we highlight companies with explosive growth potential: Aurora Innovation revolutionizing autonomous trucking, BYD dominating the Chinese EV market with breakthrough battery technology, and Tempus AI connecting with over 50% of US oncologists through its genomic sequencing business. The bond market reveals perhaps the most profound shift, as Treasury yields now incorporate default risk—evident as credit default swap spreads approach levels comparable to Greece. Combined with diminishing Japanese investor interest and the relatively small size of the high-yield market compared to Treasury issuance, these dynamics create both challenges and opportunities. Understanding relative valuation isn"t just academic—it"s essential for navigating today"s complex investment landscape. Join us as we provide the perspective you need to see beyond nominal figures and grasp what"s truly happening to your wealth. ** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice. For full disclosures, ADVs, and CRS Forms, please visit https://heroldlantern.com/disclosure ** To learn about becoming a Herold & Lantern Investments valued client, please visit https://heroldlantern.com/wealth-advisory-contact-form Follow and Like Us on Youtube, Facebook, Twitter, and LinkedIn | @HeroldLantern