A few weeks ago CNBC hosted a segment titled “Bubble Watch”. Inspired by the new all-time NASDAQ high, the question of the day was around a potential tech bubble and similarities to 1999. With valuations and VC financing on the rise and more $B+ startups every week, this seemed like a natural question.
Counterpoint: in March 2000, the NASDAQ’s trailing P/E reached a peak of 175, yet at the time of the interview was below 25. In other words, a metric normally associated with the expensiveness of a stock was six times lower than during the last bubble. Meanwhile, the DJIA peak was only around 12,000 in March of 2000, increased to 14,000 pre-recession, and is now climbing above 18,000: over 50% higher than the Y2K peak.
Calling bubbles is a fool’s errand…but if there is a bubble, it seems that tech is the wrong place to search for it. More thoughts at the linked image below.