I Am Collecting Magnificent 7% Yields At Bargain Prices

The article argues that equity valuations—especially large-cap stocks tied to the S&P 500—are stretched and present a potential market risk. Large-caps trade at a 20.8x P/E, a valuation level the author likens to 2001, and he estimates the S&P 500 would be about 33% lower absent 15 years of valuation expansion. By contrast, small- and mid-cap stocks sit near a more attractive 16x P/E, implying better forward value. The piece recommends considering municipal bonds for capital preservation and federal tax-exempt income and suggests income-focused strategies (including ~7% yields) as compelling given the valuation backdrop. Market impact: elevated large-cap valuations increase downside risk for broad indices, while relative valuation support for small/mid caps and munis could shift investor flows away from mega-cap growth names toward value, smaller-cap equities, and fixed-income income vehicles.