The Market Is Dangerously Expensive Now | Kevin Muir

June 25, 2026

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5 min read

The Market Is Dangerously Expensive Now

Kevin Muir, the macro tourist, puts it bluntly: "People somehow believe that the market has gotten less risky today than it was during the COVID lows. And if anything, it's become immensely more risky." The equity risk premium — the earnings yield of the S&P 500 compared to bond yields — has nearly inverted. In March 2020, the earnings yield was 6% and the 10-year was 1%, giving a 5% premium that historically predicted strong returns over the coming decade. Today, the 10-year is around 4.5% and the earnings yield is roughly 3.5%. Equities are priced for perfection.

The Case for a Lost Decade

Muir argues that the standard valuation metrics all point in the same direction. The Buffett indicator (market cap to GDP) is at record highs. The cyclically adjusted P/E ratio (Cape Shiller) is near dot-com bubble levels. None of these are short-term timing tools, but over five to ten years, they reliably predict returns. Goldman Sachs and other Wall Street houses are projecting low single-digit or even negative average returns for the next decade. Muir agrees: "It's probably what you should assume."

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What you'll learn

1 (01:25) **Guest introduction and thesis setup** - Adam welcomes Kevin Muir (the Macro Tourist) and frames the conversation around markets overlooking key risks
2 (02:46) **Equity risk premium signals danger** - Kevin explains the reversal from 2020 lows to today's expensive pricing
3 (04:15) **Valuation metrics at extremes** - Buffett indicator and CAPE at record highs comparable to dot-com peak
4 (05:29) **Time for defense, not offense** - Kevin argues the market is fully priced and vulnerable to repricing
5 (07:39) **Lost decade as base case** - Discussion of concentrated S&P 500 and likelihood of low/negative real returns ahead
6 (10:12) **Semiconductor cyclicality and token mirage** - Kevin highlights that semis are cyclical and recent demand surge may be artificial
7 (13:24) **Historical parallels to lost decades** - Reference to 1968-1982 sideways market chewed up by inflation

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Show Notes

Kevin Muir, publisher of the popular 'The Macro Tourist' newsletter, sees far too many investors underestimating market risk today.Everywhere he looks the market is expensive.But Wall Street can't get enough.Kevin shares why he strongly advises "now is a time for defense" in portfolios, and which assets he prefers most right now.

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