"A leading Wall Street strategist is doing some calculations about the total value of U.S. stocks rocketing to a staggering 363% of GDP as of last Friday, blowing past the infamous 212% mark reached during the dotcom bubble. It's a warning if you think it's unsustainable, but David Kelly, chief global strategist for JP Morgan Asset Management, notes that the bull market is truly epic, "stretching, with some interruptions, all the way back to the 1980s.""
"As recently as August, Fortune's Shawn Tully reported, the index reached a record close at 6,501, sending its trailing P/E ratio (using actual GAAP earnings, not wall-street projections) to 30x. Tully noted that this territory has been seen only during rare moments in market history, including the tech frenzy from 1999 to 2002, and briefly in recent crises when earnings collapsed."
Total U.S. stock market capitalization reached 363% of GDP, surpassing the dotcom peak of 212%. The multi-decade bull market has stretched, with interruptions, back to the 1980s. Market gains have been driven largely by enthusiasm for artificial intelligence, mega-cap technology stocks, and elevated price-to-earnings multiples. The S&P 500 reached a record close of 6,501, pushing its trailing GAAP P/E to about 30x. Earnings per $100 invested have fallen from $5 in 2022 to roughly $3 today. Corporate profits have barely kept pace with inflation, so most valuation gains reflect multiple expansion rather than economic or earnings growth. Historical averages showed U.S. equities at about 72% of GDP between 1955 and 1985.
Read at Fortune
Unable to calculate read time
Collection
[
|
...
]