High-Price-Earnings Ratio Stocks Appear to have Bubbles

Goldman Sachs believes that some corners of the US stock market are showing signs of a bubble, but this should not endanger the entire market.

According to “Bloomberg”, analysts headed by David Kostin pointed out in the report that high-growth, high-price-earnings ratio stocks appear to have bubbles, and the prosperity of special purpose acquisition companies (SPAC) is a sign of overheating in the US stock market. One, they said, the recent surge in trading volume of stocks with negative earnings has reached a historical limit.

These strategists added that taking into account US Treasury yields, corporate credit and cash conditions, the valuation of the overall stock market index is still below the historical average.

In addition, Goldman Sachs believes that recently, some markets seem to show that investor behavior is consistent with bubble sentiment, but given that these excessive behaviors do not occupy a high market share, the systemic risk to the market is less significant.

Citigroup also pointed out in its report last Friday that global stock markets seem to be getting more and more foamy. It also hinted that the current stock market valuation is still lagging behind the previous super bubble period, which means that assets may continue to rise. Eventually it will come, but after the bubble, there will be more bubbles in the market.


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