Just a reminder that a larger portion of today's market value is made up from Tech stocks. Tech stocks are typically higher valuations and P/E multiples, giving a skewed data point perspective vs. 20 years ago.
https://en.wikipedia.org/wiki/Nifty_Fifty
The members of that group were the tech giants of their time.
Replace "large-cap" with "tech" in that article. Rinse and repeat.
And just like at that time people are looking for adjusted valuation measures and all type of excuses to justify unrealistic growth expectations.
Like ALL previous bubbles it will end in tears.
Apple has been in 20%+ range for over a decade, Alphabet in the 25% range, Microsoft is hitting 30% regularly, and Facebook is at nearly 40% for the last 5 years.
For Amazon, I can only assume investors are factoring in huge profit margins for AWS since it seems to be singlehandedly marching Amazon’s profit margins from near 0% to 6% in the last 6 or 7 years.
Feels like a different level of profit than in previous decades.
At the end of the day, stocks are worth whatever people pay for them. It is a fact that tech stocks do have higher P/E multiples at this moment in time. The important question for investors is whether those multiples mean that the stocks are overvalued... or whether they deserve it. The market will decide that, and the answer may change drastically just like any other set of stocks.