Too-High Earnings Expectations The Stock Market's Achilles Heel? | Lance Roberts & Adam Taggart

**Lance Roberts** (0:01)
The markets are very expensive on just about every basis, because we continue to overpay for earnings that don't deliver, because economic growth is slowing, and that's gonna slow again this year. So if economic growth slows, you're going to have less earnings growth, and at some point, markets are gonna start to say, yeah, valuations at 27, 28, 29 times earnings, whatever it is, that's a bit expensive. We're gonna have to reprice markets for underlying earnings reality, particularly if we have some event that comes along that sparks a very rapid transition of that adjustment.

**Adam Taggart** (0:45)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart. Welcoming you back here at the end of another week, joined by my good and serpentine friend, the portfolio manager, Lance Roberts. Lance, how you doing?

**Lance Roberts** (0:58)
Apparently, you saw my tweet about Year of the Snake.

**Adam Taggart** (1:01)
I did. And I gotta give credit, actually. It was an eagle-eyed reader of your ex feed who saw your tweet, then tagged me on it and said, hey, Adam, here's the word of the week for Lance. So I love it when people do my work for me. But yeah, let's actually talk about why you tweeted about the Year of the Snake, besides actually having been born in it yourself. But years of the snake are not typically blockbuster years for the stock market, correct?

**Lance Roberts** (1:31)
That's right. The average return during a... So this is, if you're not familiar with what we're talking about, just real quick, these are the Chinese zodiac. So every year, there's a sequence of animals that relate to the specific year. And for instance, I was born in 1965 That was the year of the snake. My brother was born in 1960 at Propoli. He was also the year of the rat, which...
So snakes are charming, handsome, intelligent. So it's not, you know, if you were born in the year of the snake, you have a lot of really good attributes going for you. But the year of the snake is not great for the stock market. On average, the year of the snake runs about a 0.8% return. So again, it's historically... These are averages. So you've got to kind of take that with a grain of salt. But on average, the return in the year of the snake is one of the weakest return years, you know, kind of throughout history.

**Adam Taggart** (2:34)
So there you go.

**Lance Roberts** (2:35)
So if you're a goat or a cat or a dog or a pig, you're in good for you, and for good years.

**Adam Taggart** (2:41)
Yeah. So not for nothing. First off, it doesn't seem that humility is part of the snake's characteristic set. But yeah, it looks like the worst year...

**Lance Roberts** (2:51)
We're very often. Yes, we are.

**Adam Taggart** (2:54)
Yeah, but it looks like the worst years are years of the snake. Interesting. OK. And funnily enough, stocks do better under horned animals. OK. Well, whatever.
OK. We probably scared away two-thirds of the viewers here now. Pardon?

**Lance Roberts** (3:10)
There's a lot to read into that.

**Adam Taggart** (3:13)
Like I said, we've probably scared away half the viewers already, thinking that we're now just guiding our stock picks from astrological data or astrological signs.

**Lance Roberts** (3:25)
But Adam, you know, this is what we do as investors. We're always trying to piece together some type of, you know, some type of support, which in a lot of cases have nothing to do with the stock market. Zodiac signs, Super Bowl winner, you know.

**Adam Taggart** (3:40)
Sun flares, right?

**Lance Roberts** (3:43)
Yeah, but, you know, things that happen every year, you don't like the Super Bowl, right? We start trying to tie that to the market. So, well, if the AFC wins, it's good for the market or the AFC wins, it's no good for the market, whatever. And look, a lot of that is, you know, just because a football team wins, has nothing to do with the stock market. It just kind of turns out that, you know, there's a correlation to it. And so we start, you know, kind of focusing on that as gamblers, right? You know, since we're addicted to the stock market and gambling, you know, we're looking for any little edge we can get. And so now the latest is, of course, Chinese zodiacs.

**Adam Taggart** (4:16)
Well, that and you say, you know, humans, the way we're wired, we're always looking for pattern and meanings and things, you know, oftentimes things that don't have patterns or meanings. Also, we've raised many times that humans are not necessarily rational beings. They're rationalizing beings, right? So we see a correlation and we try to use that as the explanatory factor, right?