ACTV - A Cautionary Tale From The Y2K Tech Bubble And How To Profit From It

2024-02-13 08:30:00 ET

Summary

• No question we have a bubble here, but it is not the entire market - without the "Mag 7", the S&P forward multiple is around 15.5.
• The 20.4 forward multiple on the entire index appears to be all that many investors and market analysts see. This type of tunnel vision caused many to miss a great move in the broader market after the tech bust in 2000.
• What happened to the rest of the market while the tech bubble was deflating? The Russell 2000 was a super star!
• This is market history you need to know.

The market is not a monolith

If you really want to be granular, it is a market of stocks. Nonetheless, we are given daily warnings by the pros that the market is way overpriced (Y2K-S&P at 30 times forward earnings)... that we should be selling, or at least not taking on new positions until the overvaluation is worked out of the system. This is not unlike advice you might have heard back in 1996... " Irrational Exuberance ." Of course, former Fed chair Alan Greenspan would be right. He was just a few years early....

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