In this episode, we talk a pay homage to Will's mentor by focusing on value and discipline, two things very much out of favor in the market at present. It is easy to see why as in the wake of five consecutive months of market gains, statistically the odds favor further appreciation. Moreover, even though valuations are high, historically valuation has proven a sub-optimal timing tool as it relates to near-term returns. With the Fed now more inclined to look more at weakening employment versus inflation, accommodative monetary policy seems supportive of valuation even at these elevated levels.

In terms of what has been working recently, it is a strange combination of the largest technology stocks, which are now involved in myriad deals reminiscent of the late 1990s in terms of vendor financing and capital spending, and speculative retail favorites, many of which have no revenue, much less positive earnings. We still find opportunities and lower valuations among smaller and mid-cap stocks, especially those that are higher quality.

However, since 2010, we have seen two very different markets. In the wake of the financials crisis, from August 2010 through August 2010, high quality stocks outperformed low-quality stocks by a factor of almost 3x. However, since that time, low quality stocks are up 140% versus high quality gaining only half that much. Retail investor speculation and the gamification of "investing" are contributing factors.

We also discuss the challenge facing consumers in terms of housing affordability, especially as the lower and middle income cohorts experiencing declining wage growth . To simply return to pre-Covid levels, it would take one of three things, or a combination thereof:

• Home prices fall 38%.
• Incomes to rise 60%.
• Mortgage rates to decline to 2.35%.

With the first two seemingly unlikely, can the Fed get there with rate cuts, or is some form of yield curve control required.

We are hoping for a Red October on the baseball diamond but not in the market, but only time will tell.