It's a lot more complicated than that. There are advantages to having Capital chasing investments and high pER. As a thought experiment, consider what factors would have to be true for extremely cheap assets, say a PER of 1.
> As a thought experiment, consider what factors would have to be true for extremely cheap assets, say a PER of 1.
The singularity? The bad things you are thinking about doesn't come from assets being cheap, they are flaws that causes the asset to be cheap for other reasons. All else being equal it is better when things are cheaper.
I don't think it necessarily needs to invoke a singularity. It just means that the cost of capital is low relative to the value of goods produced. You can find examples of this today.
If I am a small scale fisherman from a pier, I might be happy to sell my business for one year's revenue. The pole only costs $200, and the vast majority of the value is created through my time and labor. I'll be happy to recieve my annual earnings of say $20,000, sell you the business, buy a new pole and see you out on the pier tomorrow.
Inversely, if I run a semiconductor Fab that billions of dollars in construction, the situation might be the opposite because there is a vast amount of value tied up in the infrastructure that is not represented in my earnings number.
> If I am a small scale fisherman from a pier, I might be happy to sell my business for one year's revenue. The pole only costs $200, and the vast majority of the value is created through my time and labor. I'll be happy to recieve my annual earnings of say $20,000, sell you the business, buy a new pole and see you out on the pier tomorrow.
This is a good example, imagine having to spend $200k just to get a fishing pole? That isn't a good thing, that is asset inflation, cheaper assets is better. Many modern evaluations are on that level, you pay a ton and get very little.
