Yet another week of market highs, bulls cheering, everyone geting more enthusiastic about the stock market,

President Trump is again bragging about the performance, and certainly since election day,

by mid-week up almost 20% from election day.

And if you're pro-President Trump, you can congratulate him about that.

But also worth noting that, in fact, Obama's last election is was up also 20% from election day through this period,

so lots for both side to take credit for.

But, moving to the bad news, as we've talked about many times on the Bottom Line,

prices are hitting almost record levels.

Prices relative to fundamentals like earnings and cash flow,

and the problem is that over the long term,

at least historically, price has been a good indicator of long term future performance.

Specifically, when prices are low, long-term performance is high.

When prices are high, long term performance is very low.

This is something that John Hussman, many others have talked about, and we've talked about on the show.

The other problem right now is it's not just stocks that are expensive,

it is also bonds and cash. So the usual cure for an expensive stock market,

which is diversification, may not actually help you out that much if you're investing for the long term.

In fact, John Hussman this week, a portfolio manager,

looks at the average that you can expect from a portfolio: stocks, bonds, and cash, and it's at his one of its lowest levels ever.

Good news is, we will end on good news, which is, it's still positive.

Over twelve years, Hussman estimates that you'll have the return of about one percent per year over the period,

a far cry from the 6-7 percent of diversified portfolio from normal valuations, but still positive, so it could be worse.

- And that nominal 1%. - Absolutely!

So, it's really positive! Really great!

Yeah, but I mean I do think that there are things

about this and I know last week I was little more bullish than you.

But I think there's a lot of this that makes me nervous

the desperation for yield, across all asset classes, and raising everything up.

So that scares me a little bit.

Yes, this is a big difference from prior bubbles.

In 2000 for example, stocks were extraordinary expensive, but bonds were yielding 6%!

Of course, at that point everyone said 6%! That's pathetic!

I wanna own stocks that go up 20% a year, but now you look at the 6%, you'd say

"Well, I wanna own some bonds, that's great!" But here we are, bonds yielding, point half, 2%,

not much solace there, so everyone here as you say, chasing yields.

Yeah, and even that the housing market is looking expesive again,

or at least above the long-term average compared to rents.

And even the private market is moving there, and of course, Bitcoin and cryptocurrencies.

So, it's a little, it is a little concerning.

Yes, so unless you think is different this time, which we're welcome to your opinion.

So, we are headed for a long-term period where financial assets will disappoint.