“Bubble Watch”

2015-06-03

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.


Squawk Alley