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The article is not comparing the fundamental valuation of the two assets, it is talking about bubble behavior. Investors caught in a bubble behave the same way,
by jkhdigital 6y ago
The article is not comparing the fundamental valuation of the two assets, it is talking about bubble behavior. Investors caught in a bubble behave the same way, regardless of the asset class. That's why it's a bubble--the fundamentals are ignored and the "greater fool" theory dominates market decisions.
Also, I think it may be a very long time before 15 is considered a "normal" P/E ratio again, if ever. It seems like low interest rates are here to stay.
- MrPowers 6y agoI agree with your viewpoints on bubble behavior. Robert Shiller used "bubble behavior" analyses to predict the 1999 tech bubble and the housing bubble in Irrational Exuberance. His book talks extensively about fundamentals and human psychology. Jeremy Siegel also has performed robust bubble arguments. I'm arguing that the blogs bubble behavior argument is low quality because it doesn't discuss the fundamentals and performs an apple/oranges comparison. The bubble conclusion might be right. A good bubble argument should demonstrate how the market price has completely detached from fundamentals.