4Q24 Investor Letter

“In the last five years the return of the S&P500 has been stellar, compounded at an annual rate of 14.9%. This is far above the S&P500 long-term return of ~8%. LTM P/E of S&P500 is at 30x, equivalent to a 3.3% yield, while the 10-year government bond is trading at 4.5%. The market is expecting a lot of growth in the next twelve months. But even with a forward P/E of 22x, the U.S. market still trades at zero equity risk premium now. We are wearing our cautious hat more firmly when others seem to have thrown theirs into the sky.”

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