On 9/17/2014 Simon Moore argues the S&P 500 valuation may not matter. Mr. Moore points out the deviation of stock and bond values from historical norms. He blames this deviation on low inflation (2.7% globally). He then goes on to say:
"if inflation is high, then the value of money in the future is worth less, but if it falls then the value of money in the future increases."
We just established two things:
1. The future value of money goes up in low inflation. 2. We are experiencing low inflation.
Holding cash sounds like an attractive and extremely low risk alternative to a highly priced market.
Further, he backtracks on his core argument that recent history is a weak indicator of the future due to low inflation:
"You may think cash is an attractive asset class in this environment, but one of the few reliable tenets of investing historically is that the return on holding cash has been negative"
This strikes me as a straw man argument. Can someone explain to me what I am missing here?