“The market is seemingly in can’t-lose mode.
When there’s good news, stocks spike. When there’s bad news, stocks go nowhere. Lots of people say this is all the doing of the Fed, and that it’s a bubble that will end in tears.
In a great, thorough post, Josh Brown destroys the comparisons between 2013 and 1999 in utterly convincing manner.
It’s a very thorough post which attacks this comparison in multiple ways.
The simplest debunking is on valuation. Right now, he notes, the S&P 500 is earning twice what is was in 1999. And the dividends are twice as big as well:
What kind of premium, pray tell, are we paying for double the earnings and twice the dividend yield versus 1999’s market? I’m so glad you asked – turns out we’re not paying any premium at all. We’re paying a discount. 50% off. The current S&P 500 trades for a PE of 14 versus 33 for 1999. So double the fundamentals for half the price.
And he destroys the idea that there’s speculation everywhere by reminding readers what the scene was really like in 1999, for those who have forgotten:
In 1999, the S&P 500 rose by 19.5% – a good gain but you should know that the gains were extremely concentrated, more than half of the companies in the S&P were actually negative on the year! The Nasdaq 100 was up an astounding 85% in 1999, a mania for the ages, but an extremely sector-specific one. This contrasts with today, where almost every sector is now participating in the advance in a rolling, rotating, sexually undulating manner not unlike the midriff of a belly dancer….”
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