" It’s easy to talk about the market being overvalued. But we are investing ever larger amounts of money in roughly half the companies that we did 30 years ago. What happens when you have more money chasing fewer goods? The classic answer is inflation. But it happens in stocks, too. We all have the challenge of parsing through a smaller menu to find the right meal for our own individual portfolios. Not an easy task. But there are things that can help us find the perfect feast for our own tables. Let’s set the background.

Not unlike my table, people want to know if they should be long, short or cautious in the stock market. My answer is what stock market? In 1996, there were 8,090 listed companies (source is vary). CNN tells us there were only 4300 last April. Part of that is from public companies legitimately going out of business or being merged, but just as many going private. I’ve been on public boards, and I can tell you it is a pain in the derriere. The number of private companies in the US backed by PE firms has grown from 1,900 to 11,200 over the last two decades, according to JPMorgan data.

Of those 4,300 public companies, most are small and struggling for attention. Many will go out of business. Some will become fabulously large. Choose wisely.

Mr. Cautious pointed out that the forward price to earnings ratio of the S&P 500 for 2025 is 22. Historically very high. Take out the Magnificent Seven? It is only 16, fairly middle-of-the-road.

Let’s look at a few thoughts from my friends on the topic:

Andy Kessler, now famous for being a Wall Street Journal "

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