Ghost of Igloi wrote:
One can see by this research by Russell Jackson that the valuation of stocks during was driven by the top decile of stocks. Interesting to note today’s broad overvaluation of market components.
https://www.hussmanfunds.com/wmc/wmc161003d.png
But does it show a broad overvaluation? The top decile (decile 8) is clearly just a bit higher than most other years, but not terribly so. Not anything like 2000 crash. And consider that the tech sell off of the last week will serve to correct for exactly that imbalance, right?
Now, we can argue whether the likes of Amazon, Google, Netflix, and Apple should be trading at higher valuations. But let the market decide. Clearly, up to now they have felt that their business model has warranted it. And if that is being reconsidered, as we would believe, a modest correction may be in order. But i simply do not see that the overall market looks that different now from other years, at least not from this graph.
You see doom. I'm not convinced.