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- Does a relative shortage of stocks combined with somewhat mechanical sources of buying explain the Dow rising to 29,000?
- What’s truly scarce are big, reliable cash flows that investors believe will endure economic wobbles and constant technological disruption.
- This has created a vastly bifurcated market, and an unusually wide spread between the valuation of the most expensive stocks and the cheapest ones.
- In aggregate Apple-Microsoft-Alphabet trades at 26-times this year’s profits, with no debt and enormous capacity to invest, buy back stock or fund future dividends. The broad market is below 19-times earnings.