Some Stock Market Valuation History

This post goes into some detail comparing current stock trends and valuations to those of the 2000 bubble era. Its bottom line is that the situation today isn’t anything like 2000. It doesn’t mean stocks have to rise from here, but the point is that despite today’s high valuations we don’t have a bubble situation.

It was not unusual to go to a cocktail party in 2006 where 50% of the attendees worked as realtors, appraisers, developers, flippers, etc. It was not unusual to discuss tech stocks with your cab driver in 1999. It was also common to hear “you can’t lose money on tech stocks” or “real estate is a sure bet.”

The percentage of adults that own stocks has been declining since peaking in 2007. Therefore, participation has been on a downswing rather than a bubble-like upswing in recent years. The recent decline in stock market participation may also provide a source for new funds in the coming years.