The valuation of the small-cap category has normalized closer to its 10-year historical average after a recent market correction.

“So, if I budget this kind of a growth for the second half, your valuations then in this particular the small cap category comes down to about close to its 10-year average.”

Investors are currently displaying a lack of willingness to pay high valuation multiples due to uncertainty about future cash flows, leading to PE compression.

“if somebody says, "Why the hell is the S&P uh underperforming the international stock market by the widest degree almost of all time, especially in a bull market? The only answer I can give you is that investors are less confident in future cash flows and are therefore demonstrating a lack of willin”

The current valuation of the S&P 500 index at 21 times earnings provides no actual information about future market performance.

“So we're at 21 times. All right. Tells you absolutely nothing. Quite literally there's no information in there whatsoever.”

The long-term trend of rising stock market valuations is primarily driven by the automatic investing revolution, increased equity allocations, and greater corporate efficiency.

“In summary, Ben's three reasons for higher stock market valuations. Automatic investing revolution, higher allocation to stocks, people more knowledgeable, it's easier, barriers to entry are lower, and corporations are more efficient.”

Valuation multiples should not be avoided but used with greater awareness of a company's specific economic reality.

“So please don't get me wrong, you know, the goal isn't to avoid multiples altogether, but to use them with just greater awareness.”