False Alarm! S&P 500 is NOT a Beetroot: A Schrute Analysis

Bears. Beets. Bank of America.

As Assistant Regional Manager (and volunteer Sheriff's Deputy) of Dunder Mifflin Scranton I Dwight K. Schrute am uniquely qualified to analyze financial matters. Bank of America says the S&P 500 looks pricey. Statistically expensive they whine. But fear not citizens! This is not a DEFCON 1 situation. We are not all going to die! At least not financially speaking.

The Beetroot vs. The Tech Titan

Savita Subramanian some 'Equity and Quant Strategist,' says the S&P 500 trades at 21 times forward earnings. Thirty five percent above average they claim! But comparing today's market to the past is like comparing a beetroot to a missile guidance system. In 1980 asset intensive manufacturing was almost 70% of the index. Now? Less than 20%. Do you know how many beets you need to sell to equal the output of a modern tech company? A LOT. Almost as many as the number of times Michael Scott has said something inappropriate.

Higher Quality Like My Work Ethic

The modern S&P 500 is higher quality. Higher margins. Lower leverage. Less volatile earnings. Sounds like my performance reviews at Dunder Mifflin! (Except for that one time with the fire drill. But that was Stanley's fault!). Essentially the S&P 500 has evolved become more efficient just like my beet farm. It's like comparing a first generation Zune to a modern smartphone. There is no comparison!

U.S.A.! U.S.A.! U.S.A.!

The U.S. market's premium over the rest of the world is justified. We have superior quality balance sheets growth potential and lower risk. We are basically the bears of the global economy. Strong powerful and not to be trifled with. Asia and Europe? They wish they were as mighty as us! The U.S. has double the long term growth potential lower earnings volatility than Europe plus higher free cash flow per share and a lower percentage of non earners vs. both Asia and Europe! And let's not forget our unparalleled liquidity.

Structural Advantages: Energy Independence and Reserve Currency

We have structural advantages. Energy independence. The U.S. dollar as the reserve currency. These are not small potatoes people! These are HUGE gigantic baked potatoes smothered in butter and sour cream! And don't even get me started on our tech sector leadership. We are on top like a bear dominating a salmon stream. Other countries are like Jan after Michael left her...lost and alone.

Invest Wisely Like a Schrute

So where should you invest? Bank of America's models favor communication services utilities and technology. This is acceptable. But remember always diversify. Just like I diversify my beet crops. Golden beets red beets even the occasional purple beet. And never ever trust a beet salesman with a comb over. It's a sign of weakness.