Wednesday, February 25, 2015

are we headed toward a bubble?

Could the market really be headed toward a bubble?

To find out, Cramer compared the market then versus now to see if the situations are alike. First, there is the market leader, Apple. Cisco was the leader back in in 2000, with a market cap of $550 million. Apple now has a $736 billion market cap.

Yet anyone who follows Cramer knows that he values stocks by looking at their price-to-earnings multiple. While the average stock is trading at just 18 times earnings currently, Apple now sells at approximately 15 times earnings.

In the last bubble, Cramer argues that Cisco sold at about 80 times earnings. That is a huge difference!

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