I have to admit – when I wrote that piece a few weeks ago confidently declaring that the market was not a bubble I didn’t feel terribly comfortable about it. But now that a lot of rather famous people have come out saying the same thing I guess I can feel better about being involved in this (potential) case of groupthink (that’s sarcasm in case it doesn’t come through – I actually still don’t feel comfortable about declaring this to not be a bubble even if my reputation is on the line with a bunch of much more credible and famous people).
The latest memo from Howard Marks includes a long and thoughtful discussion about the present day markets, but he concludes with similar thoughts – this is not a bubble.
- “Prices and valuation parameters are higher than they were a few years ago, and riskier behavior is observed. But what matters is the degree, and I don’t think it has reached the danger zone yet.
- “The absolute quantum of risk doesn’t seem as high as in 2006-7. “
- “The modern miracles of finance aren’t seen as often (or touted as highly), and the use of leverage isn’t as high. “
- “Prices and valuations aren’t highly extended (the p/e ratio on the S&P 500 is around 16, the post-war average, while in the 2000 it was in the low 30s”.
- I think most asset classes are priced fully – in many cases on the high side of fair – but not at bubble-type highs.”
H/t Doug Kass via Twitter