By 
Didier Darcet
3 September 2021

The Speculator, the Moderate, and the Rentier

Like in Sergio Leone’s film, the story of the S&P 500 is played out with three characters:

  • On the far right is the Speculator whose focus is primarily on capital gains.
  • Smack in the center is the Moderate, balancing out expected total return and risk.
  • On the far left the Rentier who is only interested in earnings yields and remains impassive in the face of capital volatility.

In March 2021, we warned the Speculator of the likely end of the Price-Earnings ratio expansion cycle. In June, we warned the Moderate investor that the game was no longer worth the candle. Today, we address the Rentier: The S&P 500 earnings yield is now offset by inflation.

For 50 years, when the Rentier expressed dissatisfaction, it was a message for his two fellow investors to take shelter.


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