The AI Circular Economy Trap – What If the S&P 500 Is Masking a Real-World Depression?
Poor people have been saying this for years. The US never bounced back after Covid. The "K-shaped economy" talk is real.
I feel like many people only look at share price without any context these days.
Sure the S&P 500 is on a tear and above historical ~9% CAGR lately.
But there is a reason:
EPS of S&P 500 grew:
+17% in 2023
+14% in 2024
+18% in 2025
And estimates are in the +17-18% range for 2026.
(This also makes the Cape-Schiller somewhat less relevant as it takes the average of last 10 years earnings...
2026 vs 2016: EPS grew +160%
2016 vs 2006: EPS grew +27%)
And Ackman is right about some great business getting cheap.
$MSFT share price is -15% vs 2 years ago while EPS grew +44%
Same for many great businesses for which EPS grew more than +40% last 2 years while share price didn't: BKNG, MA, SAP...
Poor people have been saying this for years. The US never bounced back after Covid. The "K-shaped economy" talk is real.
I feel like many people only look at share price without any context these days.
Sure the S&P 500 is on a tear and above historical ~9% CAGR lately.
But there is a reason:
EPS of S&P 500 grew:
+17% in 2023
+14% in 2024
+18% in 2025
And estimates are in the +17-18% range for 2026.
(This also makes the Cape-Schiller somewhat less relevant as it takes the average of last 10 years earnings...
2026 vs 2016: EPS grew +160%
2016 vs 2006: EPS grew +27%)
And Ackman is right about some great business getting cheap.
$MSFT share price is -15% vs 2 years ago while EPS grew +44%
Same for many great businesses for which EPS grew more than +40% last 2 years while share price didn't: BKNG, MA, SAP...