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John Malone: Growth Stocks Resemble 'Bubble' of Late '90s

'The equity markets right now are interested in growth above all other criteria. ... Profitability to be determined later,' Liberty Media chairman says.
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You can add Liberty Media  (LSXMB) - Get Liberty Media Corp. Series B Liberty SiriusXM Report Chairman John Malone to the list of luminaries who see froth in the stock market, particularly growth stocks and initial public offerings.

“There’s no question that the equity markets right now are so interested in growth above all other criteria, and this is like the bubble in the late ’90s,” Malone told CNBC. “It’s all about growth. This is a land rush right now. Profitability to be determined later.”

The Russell 1000 Growth Index has jumped 27% year to date, beating the S&P 500’s gain of 25%.

As for IPOs, Audit Analytics counted 199 for the third quarter. That was the biggest third-quarter total in 22 years, adding up to $49.7 billion in fresh capital raised.

Again profitability is an issue, Malone said.

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“If you have a lot of cheap money creating too much competition particularly in capital-intensive businesses, it can wreck the profitability of any business,” he explained.

“There’s a car company [electric vehicle maker Rivian  (RIVN) - Get RIVIAN AUTOMOTIVE, INC. Report] that is just going public that has a $130 billion market cap and hasn’t built a car yet.”

Rivian began trading Nov. 10, and has surged 63% to $126.82 from its offering price of $78. That’s even after a 13% correction Thursday.

Among others sounding warnings about financial markets is Goldman Sachs CEO David Solomon.

“When I step back and think about my 40-year career, there have been periods of time when greed has far outpaced fear,” he told Bloomberg recently. “We are in one of those periods. My experience says those periods aren’t long lived.”