Thursday, November 12, 2015
Are we in a bubble? The price to earnings ratio of the S&P 500 is about 22. That's ridiculously high for an average, below 20 is reasonable, and 15 is more normal. Antique Ferrari prices are off the charts for the 250 series, up to $38 million for a car that sold for $9000 when first sold. Plus, the tallest building in the Bay Area is being built right now in San Francisco. All may be indicators of a bubble. That being said, I don't think it's an overall economy bubble but more of a tech bubble. In the last few weeks I have learned the term "unicorn" which is a billion dollar company based on private valuation from investors, not a public valuation, or based on income, in other words Kohler doesn't count. A billion dollars?!