1: Wild Valuations
This chart shows how much of the market (in terms of economic value) has an EBIT (earnings before interest and tax) that is lower than interest expense. The proportion has skyrocketed!
While not every company will be profitable, the sheer weight of these companies in the marketplace is something we’ve never seen before.
2: Real Yields on Stocks Dipped into Negative Territory
While I’m not a fan of the methodology used below (real earnings + dividend yield), the message remains clear: When adjusted for inflation, yields on stocks are negative for the first time since at least the early 1970s. This implies that stock prices are extraordinarily high.
3: Large Cap Software Stock Valuations Through the Roof
The ratio of enterprise value to recent sales is almost double the 2000 peak.
Correction to the last email: I had said 2/3rds of the Nasdaq is down over 50%. I meant to say 1/3rd.
Thanks to a reader for pointing that out.