The dip was brief and shallow. Here we are again, with the NASDAQ pressing gains above 6,100 — led by tech. There are some out there who are scared of valuations, people craven with suggestions that the ‘end is near’ because we’re so overvalued.
It is true, or FAKE NEWS?
I’ll delve into some of the valuation data in Exodus to illuminate the truth.
The current median PE for the market is 22x, down from 23x in 2015.
The median PE for tech is 28x, a 26% premium above the overall market PE. More or less, this has been the norm since the financial crisis ended in 2009.
The median PE for basic materials is trading at a premium to the overall market for the second year in a row. The only two times this has occurred, in recent years, was 2008 and 2010. Basic materials usually trade at a much lower PE.
Financials are trading at their lowest PEs since 2014, at 19.5x.
Healthcare PEs took off in 2011, and have been above 25x since 2012. The last time they were this high was 2005 (24X), just before a 5 year contraction period.
Bottom line: PEs have been elevated since 2011. Earnings growth have been matching the multiple expansions — creating very few outliers. While one could argue that tech trading at 28x is fucking ridiculous, it has been this way since 2011 — so why chimp out now? People are falling for the gambler’s fallacy or the ‘monte carlo fallacy’, whereby investors believe something must begin or end because of their perception of time. Both bull and bear markets do not have expirations dates and making decisions based off time is simply guess work. Based off present valuations, there isn’t a reason to be alarmed.
There are other reasons to be worried, more based in the earnings part of the PE, determinant upon whether the global economy can continue its measured pace without central bank stimulus.
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This is why I subscribe to your blog and your fucking software. Slow clap.
You had to go there
https://youtu.be/0a-W4IKoaBE
Showtime, how do markets go up like that, they just dropped!
Yes jenny, they have a friend helping them, like when you get hurt.
Go play and tuck that ball under your shirt as you’ll be pregnant someday with a child you can’t afford.
haha no tripledigit
Pink Floyd marathon. Played forever in Hell.
I’d rather be long gold than stawks
dont worry
when market drops well make money on the downside
market drops later though
I guess who’s makin money ( janet and mnuchin friends ) is leaving dust behing here and there
A little disappointed you weren’t willing to go there. The real story today was Flynn aka Benedict Arnold. Regardless of which side of the aisle you sit on, the hypocrisy is pretty thick here…https://www.youtube.com/watch?v=i99r_91Q4lM
I try to avoid politics during trading hours. The Flynn story is uninteresting to me, since it’s a gigantic nothing-burger.
Nothingburger with no ketchup, no mustard, no pickle, no onion…not even a bun.
In other words. move along, there’s nothing to see here.
What a lovely owl in the picture.
Fuck that frog. Baby vermin have died you racist xenophobe.
Normal P/E’s since 1997. I think nobody cares anymore about P/E and it is outdated and pre 1997 it was just low. P/E 30 is the new normal baseline.
Still points to a market merely being stretched/overstretched/overcrambloated
Pe 30 is not normal. Pe 30 baseline. Sure keep going. 40 next. 55.
Only one thing it leads to. Reset and crash.
As bears said would be the trajectory
And as I said was becoming
,cannibalization,
Were it not for all the stock buybacks over the years since the crisis, the PE’s would be even higher. And these companies have been buying back stock at higher multiples, so where’s the value to shareholders in that? But hey, the CEO’s and management got more stock options that they were able to exercise them handsomely, right? It’s all good. ? A bubble can be debated and might be hard to measure. But it’s like porn. You know it when you see it.