Not Different This Time?

“I’m not afraid of volatility. Volatility doesn’t scare me in the least–I’m afraid of volatility if you’re not getting paid for it, and that’s the reality now. If stocks are priced to give a decent yield to compensate for the volatility, I’m fine with that. I’m not eager to expose myself or my clients to an asset class that is expensive by historical standards, that has earnings 60% above the 10-year average, and [is] facing some real risk that in a recession they could retrace a lot of their growth. Where stocks are 60% above their 10-year average in terms of price–that creates a whole set of risks that are pretty uncomfortable–basically the markets are saying, ‘Things are different this time,’ and all too often, when the markets say, ‘Things are different this time,’ they’re wrong.”