The global strategist at Societe Generale is drawing attention to the fact that stock prices are running far ahead of the actual profits that companies are delivering.
The chart below, which he shared in a recent note to clients, illustrates the disconnect he sees between valuations and profits that reminds him of the 1990s. The tech industry has become the focal point when anyone talks about richly valued growth stocks, having delivered one of the strongest sector returns of this bull market.
The 2001 recession exposed and collapsed tech along with these non-growth stocks that had "illusory" earnings expectations attached to them.will not only ravage tech stocks, but others that have been wrongly assigned growth-like valuations. are beginning to flash. are falling after two straight quarters of growth declines in the first and second quarters of 2019.
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