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Even with all the stimulus and lowered lending rates, today's PE ratios were dwarfed by the dot-com bubble. We're at 31, max was 44. https://www.multpl.com/shi

Even with all the stimulus and lowered lending rates, today's PE ratios were dwarfed by the dot-com bubble. We're at 31, max was 44. https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe

judge2020 6y ago
A fun outlier is Tesla :) > PE Ratio (TTM) 984.55 https://finance.yahoo.com/quote/TSLA https://finance.yahoo.com/quote/TSLA
- MichaelDickens 6y ago
  If you want to look at individual companies, there were lots of publicly-traded companies in 1999 that not only had negative earnings, but didn't even have revenue.
  - debian3 6y ago
    Like NKLA? With a market cap of $16B
  - owyn 6y ago
    Ha yes I worked for a company that went public in 1996 with approx 75k of revenue for the previous year.
cm2187 6y ago
But I'd argue the economic forecasts look a lot more bleak than in 1999.
- grumple 6y ago
  In the short term, sure. But we have a more skilled, more educated population with more knowledge and better technology than ever before. We have challenges ahead of many sorts, but in terms of economics we’re pretty well equipped globally. You could argue the US is poorly equipped for manufacturing but that’s only one part of the economy.
  - fallingfrog 6y ago
    Sorry but this is not the state of things if you are under 50 years old. If you are under 50, you are probably better educated but have much less wealth than your parents did at the same age. Your health suffers from years of having no health care. Your teeth are bad. Climate change is going to change your life imminently, and nobody in a position to do something about it cares. You are putting off having kids, or choosing not to. You’ve seen three economic crises in your lifetime and expect more. You’re not so much hoping for things to get better as much as you’re waiting for the other shoe to drop. There is just little reason to be optimistic right now.
    - lotsofpulp 6y ago
      I don't know why this comment is downvoted when the income/wealth data supports it. So much of the US economic engine after WW2 up to 2000 was driven by the fact that people were having lots of kids, and the taxpayers back then were borrowing from future taxpayers. That works if you continue to have lots of kids, but now that that has slowed down, plus the increase in labor supply via women in workforce, and outsourcing to other up and coming countries, plus decrease in demand of labor due to automation, makes for a bleak future outlook for many (as opposed to a growth outlook in the decades after WW2). This is ignoring climate change and its effects. Which can only be remediated with reduced consumption. Which would also cause a reduction in demand for labor.
      - fallingfrog 6y ago
        Thank you, I don’t take it personally, you have to expect some flak when you tell people things they don’t want to hear. I think I’ll go back and edit where I said there was no reason to be optimistic about anything, because that’s not exactly true, and people on HN are very sensitive to hyperbole. If you are going to say something unpopular you have to be very careful to be accurate.
    - grumple 6y ago
      I mean, I guess you’re right. I’m the counterexample (grew up poor, have more than the zero of my one parent and my outlook looks good) but it took some time to get here. My college friends (all from wealthy families) are all well-off, but my friends from home are still poor and have poor economic prospects. But some of that is self-imposed because they haven’t put serious effort into economic pursuits. I am quite tired of economic crashes, but I’ve failed to convince enough others to vote and advocate for changes. Those who do care about change are focused on matters other than economics, which I believe to be a mistake.
nine_zeros 6y ago
I mean, we know how the dot com boom ended. With the current state of the economy, I'm not expecting anything better after a bust.
- throw0101a 6y ago
  > With the current state of the economy, I'm not expecting anything better after a bust. As someone who has another couple decades until retirement, a drop in asset prices would be great for me personally (though I'm sure it would be painful for many Baby Boomers). For better or worse I wasn't very liquid when the stock market indexes tanked in March. Another lessons learned: invest in bonds at least a bit, not only to reduce volatility, but also because you'll have some 'dry powder' available to be able to rebalance when you equities take a hit. Though total returns on bonds isn't too bad: > The Nasdaq 100 ETF (QQQ) is up an astonishing 25.5% this year during a pandemic and that’s including a 29% peak-to-trough drawdown. But the long-term treasury ETF (TLT) is up 27.3%. * https://awealthofcommonsense.com/2020/08/why-would-anyone-own-bonds-right-now/ https://awealthofcommonsense.com/2020/08/why-would-anyone-ow...
omgwtfbyobbq 6y ago
One other thing that makes comparison hard is the changes in the tax code. PE ratios in the past were based on certain corporate tax rates, which have been reduced significantly. Something like after tax PE ratio might level the field when comparing PE ratios across time.
- 2arrs2ells 6y ago
  Earnings are already after tax. That's why EBITDA is EBITDA (earnings before interest, tax, depreciation and amortization).
  - omgwtfbyobbq 6y ago
    Thank you! For some reason I thought they were pre-tax. Edit - It seems like adjusting for whatever the fed funds rate is might provide a more accurate comparison. https://www.suredividend.com/interest-rates-valuation/ https://www.suredividend.com/interest-rates-valuation/

judge2020 6y ago

A fun outlier is Tesla :) > PE Ratio (TTM) 984.55 https://finance.yahoo.com/quote/TSLA https://finance.yahoo.com/quote/TSLA

MichaelDickens 6y ago
If you want to look at individual companies, there were lots of publicly-traded companies in 1999 that not only had negative earnings, but didn't even have revenue.
- debian3 6y ago
  Like NKLA? With a market cap of $16B
- owyn 6y ago
  Ha yes I worked for a company that went public in 1996 with approx 75k of revenue for the previous year.

cm2187 6y ago

But I'd argue the economic forecasts look a lot more bleak than in 1999.

grumple 6y ago
In the short term, sure. But we have a more skilled, more educated population with more knowledge and better technology than ever before. We have challenges ahead of many sorts, but in terms of economics we’re pretty well equipped globally. You could argue the US is poorly equipped for manufacturing but that’s only one part of the economy.
- fallingfrog 6y ago
  Sorry but this is not the state of things if you are under 50 years old. If you are under 50, you are probably better educated but have much less wealth than your parents did at the same age. Your health suffers from years of having no health care. Your teeth are bad. Climate change is going to change your life imminently, and nobody in a position to do something about it cares. You are putting off having kids, or choosing not to. You’ve seen three economic crises in your lifetime and expect more. You’re not so much hoping for things to get better as much as you’re waiting for the other shoe to drop. There is just little reason to be optimistic right now.
  - lotsofpulp 6y ago
    I don't know why this comment is downvoted when the income/wealth data supports it. So much of the US economic engine after WW2 up to 2000 was driven by the fact that people were having lots of kids, and the taxpayers back then were borrowing from future taxpayers. That works if you continue to have lots of kids, but now that that has slowed down, plus the increase in labor supply via women in workforce, and outsourcing to other up and coming countries, plus decrease in demand of labor due to automation, makes for a bleak future outlook for many (as opposed to a growth outlook in the decades after WW2). This is ignoring climate change and its effects. Which can only be remediated with reduced consumption. Which would also cause a reduction in demand for labor.
    - fallingfrog 6y ago
      Thank you, I don’t take it personally, you have to expect some flak when you tell people things they don’t want to hear. I think I’ll go back and edit where I said there was no reason to be optimistic about anything, because that’s not exactly true, and people on HN are very sensitive to hyperbole. If you are going to say something unpopular you have to be very careful to be accurate.
  - grumple 6y ago
    I mean, I guess you’re right. I’m the counterexample (grew up poor, have more than the zero of my one parent and my outlook looks good) but it took some time to get here. My college friends (all from wealthy families) are all well-off, but my friends from home are still poor and have poor economic prospects. But some of that is self-imposed because they haven’t put serious effort into economic pursuits. I am quite tired of economic crashes, but I’ve failed to convince enough others to vote and advocate for changes. Those who do care about change are focused on matters other than economics, which I believe to be a mistake.

nine_zeros 6y ago

I mean, we know how the dot com boom ended. With the current state of the economy, I'm not expecting anything better after a bust.

throw0101a 6y ago
> With the current state of the economy, I'm not expecting anything better after a bust. As someone who has another couple decades until retirement, a drop in asset prices would be great for me personally (though I'm sure it would be painful for many Baby Boomers). For better or worse I wasn't very liquid when the stock market indexes tanked in March. Another lessons learned: invest in bonds at least a bit, not only to reduce volatility, but also because you'll have some 'dry powder' available to be able to rebalance when you equities take a hit. Though total returns on bonds isn't too bad: > The Nasdaq 100 ETF (QQQ) is up an astonishing 25.5% this year during a pandemic and that’s including a 29% peak-to-trough drawdown. But the long-term treasury ETF (TLT) is up 27.3%. * https://awealthofcommonsense.com/2020/08/why-would-anyone-own-bonds-right-now/ https://awealthofcommonsense.com/2020/08/why-would-anyone-ow...

omgwtfbyobbq 6y ago

One other thing that makes comparison hard is the changes in the tax code. PE ratios in the past were based on certain corporate tax rates, which have been reduced significantly. Something like after tax PE ratio might level the field when comparing PE ratios across time.

2arrs2ells 6y ago
Earnings are already after tax. That's why EBITDA is EBITDA (earnings before interest, tax, depreciation and amortization).
- omgwtfbyobbq 6y ago
  Thank you! For some reason I thought they were pre-tax. Edit - It seems like adjusting for whatever the fed funds rate is might provide a more accurate comparison. https://www.suredividend.com/interest-rates-valuation/ https://www.suredividend.com/interest-rates-valuation/