It’s a big day – NASDAQ closed above 5000 for the first time, since March 2000. Fourteen years ago, when the likes of inktomi and Lycos were at this peaks (~$25B and $12.5B, respectively), was when things started to come crumbling down.
The debate of whether this is the beginning of another steep downfall is upon us. Arguments are vigorous on both sides. On average, though, valuation multiples are much saner than 14 years ago, and corporate dividend yields are much higher than last time around. Meanwhile, long bonds are yielding approximately 1/3 what they did back then.
Yes, there are definitely a category of stocks exhibiting irrational exuberance. I even own some (TSLA?). But there are also plenty of more humble stocks, like Taiwan Semi (TSM), at 14.6 TTM PE, <1 PEG, and pays the same yield as a 10yr Treasury.
Don’t get me wrong, I’m going to take some profits, here, but I’m not planning to liquidate, either. It’s probably worth taking a hard look at some stocks that are riding a momentum wave, which will be some of the first to experience pain, when the overall market takes a breather.
Disclosure: I am long TSLA, but am considering reducing my position within the next quarter.