March 4, 2017
Stop! This is NOT like the dot-com bubble... it’s much worse, according to this chart
By Shawn Langlois
Marketwatch.com
Economic, demographic and productivity trends all portend stagnation
The man behind the iBankCoin blog on Thursday morning asked his readers: “Where were you when Snap ripped off America?”
While his rant focused on the wild valuation the Snapchat parent SNAP, reached in its debut, others may see the booming IPO as a last gasp before the bubble pops like it did back in the days of Pets.com and Webvan.
But the truth is, this market climate -- which has seen record runups for the Dow, S&P 500 and Nasdaq -- is nothing like we saw during the dot-com hey day. By many measures, it’s actually worse, according to numbers crunched this week by 720 Global’s Michael Lebowitz.
“Even though current valuation measures are not as extreme as in 1999, today’s economic underpinnings are not as robust as they were then,” he wrote. “Such perspective allows for a unique quantification, a comparison of valuations and economic activity, to show that today’s P/E ratio might be more overvalued than those observed in 1999.”
In this chart, Lebowitz stacks up the metrics from the years running up to the dot-com explosion versus what we’ve seen since 2012:
Lebowitz acknowledged, of course, that equity valuations back in 1999 were, as proven after the fact, “grossly elevated.”
But when put up against a backdrop of economic factors, he says those numbers appear to be relatively tame compared with today.
“Some will likely argue with this analysis and claim that Donald Trump’s pro-growth agenda will invigorate the outlook for the economy and corporate earnings,” he wrote. “While that is a possibility, that argument is highly speculative as such policies face numerous headwinds along the path to implementation. Economic, demographic and productivity trends all portend stagnation.”
His bottom line: “There is little justification for paying such a historically steep premium for what could likely be feeble earnings growth for years to come.”
Meanwhile, Snapchat’s surging market capitalization just surpassed that of American Airlines and CBS Corp.
http://www.marketwatch.com/story/stop-this-is-not-like-the-dot-com-bubble-its-much-worse-according-to-this-chart-2017-03-02?siteid=yhoof2&yptr=yahoo
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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