Forgive me if today’s stock market makes me feel a bit like Rip Van Winkle. Maybe, like Rip, I’ve been asleep since early 2000, which marked the peak of one of the biggest bull markets ever.
Consider today’s initial public offering (IPO) market. It’s on fire, with new multibillion-dollar tech stocks going public at a stratospheric valuation virtually every week. Uber Technologies (UBER). Lyft Inc. (LYFT). Pinterest (PINS). At the current rate, the dollar value of IPOs seems set to top the $97 billion 1999 record. What’s even more worrisome: Many of the most popular IPOs (such as Uber and Lyft) went public despite losing money hand over fist.
Then there are the FANG tech stocks: Facebook (FB), Apple (AAPL), Netflix (NFLX) and Google parent Alphabet (GOOGL). This handful of stocks comprises fully 10% of Standard & Poor’s 500-stock index market capitalization. And the forward price-to-earnings ratio on the FANG stocks, on average, is a staggering 49.6, according to Yardeni research.
This all sounds way too familiar to anyone who lived through the 2000-02 tech meltdown — the worst bear market since the Great Depression of the 1930s.
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