We are NOT in an Economic Bubble!
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Remember Schwarzenegger and kindergarten cop, the kids were bothering him because he didn’t feel good he had a headache and they asked him if it’s a tumor and they kept bugging him and it’s not a tumor. Well, I’m gonna tell you, it’s not a bubble. Not a bubble, not a bubble. No, the first half of this year, this is not a bubble environment and a lot of fools that parade themselves on TV, like to call out different things, make comparisons, they grab.com.
Some of these people that are actually doing it, I think that they were probably in middle school when the dot com bubble was actually taking place and they’re opining on the markets today and the dot com bubble, like there’s some sort of authority and they don’t know a damn thing. S&P 500, what? What? 13, 14%, I don’t know, over the course of the year. NASDAQ’s up 30%.
and talk about, oh, it’s been these few tech companies that have driven this rally. And that’s true. The overall breadth of the market has not been that strong. But again, I think that will slowly but surely change over time. And you’re going to see some rotation. We talked about that with proper asset allocation. But let’s talk about bubbles, shall we? The idea that the valuations are anywhere near
anywhere even close to where they were during the whole dot com run up is patently absurd. Again, let’s take a look at the numbers here. The price to earnings ratio, Nasdaq right now is 30. It was 100. That’s right, 100 at the dot com peak. And you got to remember the dot com peak,
Most of them weren’t real. Most of them, they didn’t have any earnings. Maybe that was a new paradigm, earnings didn’t matter anymore. They didn’t have any earnings. They had CEOs with a goatee and a foosball table in the break room, most of these companies. These companies that have run up that are sporting, I’m gonna call it a rich valuation, call it a rich valuation at 30. At least they’re real. And again, it’s nowhere close.
to where it was. The price to earnings of the technology sector of the S&P 500 back in the dot com era was 80. 80, it’s 35 now and interest rates were higher back then. And again, the markets can continue to move higher. Do I think that they’ll probably take a breather based upon all sorts of uncertainty with the…
Absolutely. There’s no doubt about it. I wouldn’t be surprised if the market goes sideways for the rest of the year. And quite frankly, I don’t care. I don’t care. Does it matter to me? Does it matter to my clients? It really doesn’t. It’s where it’s going to be five years, 10 years, 15 years from now. But the idea that there’s some sort of bubble is crazy. Yeah, sure, the market has run up. Can we have a pullback?
Absolutely. No doubt about it. Can I time it? Nope. Can anybody else? No. They can’t. I mean, you take a look at some of these names, these top analysts at these firms that they paraded on at the beginning, especially these bears. I mean, they were on all the time. And the arrogance, which they make these predictions.
I’m like, are you kidding me? You’re that sure of yourself? Really, you’re that sure of yourself? I don’t even understand, again, I understand the business of Wall Street and they want people moving and grooving and doing all sorts of things. The only way you’re gonna be successful people is if you put together a portfolio, you own great companies, and you do it over the long term. That’s it. Yeah, did anybody really expect a run-up?
Run up in the NASDAQ by 30% in the first half of this year? No, no, what were we told by the Wizards of Smart? Gotta be a recession, gotta be a recession. And they’re still, still in search of recession. We’ll see. If it comes, it comes. The question is whether or not it’s going to matter to you. And you wanna get into a position where you’re like, eh, okay, recession, eh, eh. Market backed off 10% after running up, no big deal.
I’m dollar cost averaging, I’m just going to own more high quality companies. If that’s your thought process, you’re actually doing the right thing. Watchdog on wallstreet.com
