Don’t Worry: “It’s Only 1997” Besides “It’s Different This Time”
It’s Only 1997
Bloomberg explains In Dot-Com Bubble Time, It’s Still Only 1997 for U.S. Equities.
“Terrified that rallies in Facebook Inc., Amazon.com Inc. and Google portend a millennial catastrophe along the lines of the dot-com bust? Relax. Going by one doomsday clock, it’s only 1997 in bubble years … when there was still 2 1/2 years and 60 percent to go in what became the longest bull market on record.”
It’s Different This Time
The Wall Street Journal says This Time Is Different: Two Reasons Not to Be Alarmed by the Nasdaq Record.
The Nasdaq Composite crossed the 6000 mark on Tuesday morning, setting another record in a year that is already a hot one for the index, and further putting the old dot-com days in the rear-view mirror. But there are at least two notable old records it has not yet surpassed. One is a measure of how far the index still has to go, the other is a mark nobody really wants to see again.
- Inflation-adjusted Nasdaq. Adjusted for inflation, the Nasdaq Composite still has not broken its record high, fully 17 years after that peak, according to data from the Journal’s Market Data Group.
- Price-to-earnings ratio. The dot-com boom was such a spectacular feeding frenzy that by one measure of valuation, the Nasdaq Composite is not even at 40% of its peak.
The companies in the index collectively traded at 27.5 times their last 12 months of earnings, according to Thomson DataStream.
Shiller P/E Ratio
Base image: Shiller PE Ratio
While waiting for that final 20% (and why should it stop there?) relax. Repeat after me: It’s not bubbly, it’s Bubblicious. Enjoy the ride.
Besides, there cannot be a bubble because, as we all know, it’s different this time. Honest!
Inquiring minds may also wish to consider Reader Asks: Can the Bubbles Last Forever?
Mike “Mish” Shedlock