Cheap Isn't the Same as Good

Manuel Blay, editor of The Dow Theory letter — the publication carried on from Jack Schannep — takes on a familiar worry: that US equities are simply too expensive next to cheaper markets abroad. His answer is that cheapness on its own is a poor reason to buy, because a low multiple without earnings growth or innovation is how value traps form.

He points to a season in which sell-side analysts, by Bloomberg's account, materially underestimated US earnings, and to professionals who moved money back toward the US on the strength of the AI cycle and geopolitics. Behind the numbers he lists structural advantages — energy independence, innovation capacity, a flexible labour market, a friendlier tax and regulatory setting — and concludes that markets pay for profitable growth, not for low valuations alone.

The core idea "Expensive" and "overpriced" aren't the same word. Blay's argument is that US multiples look high because the earnings underneath them keep beating, and that buying a cheaper market without that growth is how investors talk themselves into value traps. Price follows profits, not the other way round.

Where it fits

It's a clean statement of the bull case for US leadership, and a useful foil to our own valuation-gap work and the recurring "is the US too expensive" debate. Blay usually reads markets through Dow Theory trend signals; here we engage with his argument about earnings and valuation, not any buy-or-sell call — one view in a marketplace of them, not a Closelooknet opinion. Whether US leadership holds from here is a probability, not a promise.