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Speaker 2: Michael Darta not so strenuous this morning with Roth Capitol.
Speaker 2: Michael Darta on where we are now looking at the past,
Speaker 2: the good news of double digit in a new world.
Speaker 3: I think it's going to be really hard to maintain
Speaker 3: that double digit growth. I mean, if you just do
Speaker 3: a super basic Tom Keen scatterplot regression on forward pees
Speaker 3: in ten year future returns, you know, coming into the
Speaker 3: year with the forward pe twenty two x, you know,
Speaker 3: typically that's a level where you see very weak, potentially
Speaker 3: even negative ten year forward returns. So the higher the valuations,
Speaker 3: the lower the longer term forward returns are. And you
Speaker 3: know that's a little bit of a different game than
Speaker 3: the chase that's been on with momentum, and then more broadly,
Speaker 3: I do think that these disruptions to the supply side
Speaker 3: eat away at the earnings expectations.
Speaker 2: Michael Dartera. There is just brilliant throughout the entire conversation
Speaker 2: of talking about the geopolitical shocks, the international shocks, is
Speaker 2: supply side shocks, which just put a damp or put
Speaker 2: a weight on everything. And of course that mystery of
Speaker 2: where is forward GDP growth right now? Is it sub
Speaker 2: two percent? Atlanta GDP a negative statistic right now? That's
Speaker 2: at least right now that could subject change as we
Speaker 2: stagger out to March thirty one, which is next Monday.
Speaker 2: Cam Dawson knows that she too is trying to consider
Speaker 2: the uncertainties that are out there. Cam Dawson a new
Speaker 2: edge on her double digit take.
Speaker 4: Yeah, I think that that's very very likely. Is that
Speaker 4: we've been in this world of very strong double digit
Speaker 4: returns the last two years. Investors got conditioned to expecting that,
Speaker 4: which is why you saw these estimates for seven thousand
Speaker 4: plus in the S and P five hundred. That's very
Speaker 4: hard to do when you start the year at twenty
Speaker 4: two point six times forward earnings. You start the year
Speaker 4: at the ninetieth percent tile of positioning. So our best
Speaker 4: case scenario for twenty twenty five is that you get
Speaker 4: growth upside that's equivalent to earnings growth. But that assumes
Speaker 4: that multiple stay constant. And we're not sure if you
Speaker 4: get multiple stay in constant in a world where you're
Speaker 4: cutting earning sestaments and there's some risk off flavor review.
Speaker 2: That again, Kim Dawson. A new edge when multiples stay constant.
Speaker 2: I think I talked about this yesterday or the day before.
Speaker 2: I forget, but let's do it again. A multiple is
Speaker 2: a ratio, a numerator and down below a denominator, and
Speaker 2: they both move. They move somewhat correlated, but also move separately.
Speaker 2: So there's four outcomes. The numerator goes up, the numerator
Speaker 2: goes down, the denominator, the numerator goes up, the denominator
Speaker 2: goes down. So there can be movement or dynamics in
Speaker 2: your study of any given ratio that you look at.
Speaker 2: I'll be honest. They spend less time on PE and
Speaker 2: much more on a study a free cash flow. What
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