Regardless of what story you are trying to tell, there is a chart that supports your case.
You want to believe the market is expensive? Just look at these S&P 500 valuation ratios relative to where we’ve been historically:
You want to believe the market is still cheap? Consider why the valuations are higher. The top 10 companies in the S&P 500 now represent nearly 40% of the total index value, and these companies have earnings, margins, and forecasted growth unlike anything the world has ever seen.
And this dynamic isn’t just true for financial data.
Do you want to believe that kids today are staying unmarried for too long? Consider this chart (from Derek Thompson), which illustrates that 80% of American women born in 1940 were married by age 25, compared to just 20% of 25-year-old American women born in 1990.
Do you want to believe that kids today do a better job of selecting marriage partners? Take a look at this chart (also from Derek Thompson), which illustrates the remarkable trend of fewer marriages ending in divorce.1
At the end of the day, charts don’t give us answers — they simply allow us to illustrate data in a way that makes it easier for us to create our own stories. Two people can look at the same numbers and walk away with opposite conclusions, each feeling certain they are right.
That’s why successful investing (and decision-making more broadly) isn’t about finding the “perfect chart” — it’s about recognizing our own biases, slowing down our instinct to jump to conclusions, and remembering that context matters more than any single data point.
Personal note:
My mom officially retired this week (for what I presume is the final time). So congrats to her. May your golf game continue to improve.
This is an older picture, but it is the one she uses as her profile picture on Facebook, so it feels safe to use.
I used the marriage example because I think these charts are interesting. Another useful datapoint from the original article: “Marriage rates are declining most among low-income and low-education groups. That means the marriages that do happen are more likely to involve higher-education, higher-income couples who have always had a lower divorce rate.”
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