Part 8/15:
Addressing valuation concerns, Wilson acknowledged that the market appears expensive—S&P 500 forward P/E ratios near 23.5 and high Buffett indicators signal overvaluation. Yet, he posited that the market’s strength may be justified by improving earnings growth, possibly approaching 20% in 2026, driven by revenue rebounds, operating leverage, and inflation passing through corporate pricing power.
He explained that most stocks have underperformed over the past three years, with Median stocks experiencing negative earnings growth. The current inflection point—marked by a rebound in revenue growth and efficiency—could lead to a renaissance in earnings, especially if inflation remains embedded and wage inflation stimulates low-end wage growth.