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Berkshire's Munger: Stocks Even Crazier Now Than in Boom

The forward 12-month price-earnings multiple for the S&P 500 stood at 20.4 on Thursday, up from the 10-year average of 16.6.
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Count Berkshire Hathaway Vice Chairman Charlie Munger in the stocks-are-a-bubble camp.

The market is now “crazier than the boom,” he said at an investment conference Friday, The Australian Business Review reported.

“Some of the valuations we saw in the boom were higher,” he said. “But overall, I consider this as being even crazier than the boom which blew up in 2000.”

The forward 12-month price-earnings multiple for the S&P 500 stood at 20.4 Thursday, up from the five-year average of 18.4 and the 10-year average of 16.6, according to FactSet.

The trailing P-E multiple totaled about 24 and also exceeded its five- and 10-year averages -- about 23 and 20 respectively.

Elevated valuations make it difficult for investors to garner strong returns now, Munger said. “It is hard to get results which could be called normal results in investing.”

Meanwhile, Wells Fargo has put together a list of stocks that should benefit if the Senate joins the House in approving President Joe Biden’s spending bill, known as Build Back Better.

The list includes hydrogen-darling Plug Power  (PLUG) - Get Free Report, oil titan Exxon Mobil  (XOM) - Get Free Report and utility stalwart Public Service Enterprise Group PEG.

Wells Fargo analysts “believe the bill is more likely than not to pass, but expect major modifications in the Senate, as it requires all 50 Democratic members to get on the same page.”

As for clean energy, “the decarbonization train has already left the station,” the analysts said. “But Build Back Better could add steam as it makes renewable/alternative fuels more cost competitive via financial incentives,” they said.