A Comparison of Key Economic Indicators of 1999 & 2021

If we were to compare the dot com bubble and now, it's quite clear that we are in a much bigger bubble.

Fed Funds Rate were 5.50% back then, but now it is 0%, which have pushed valuation towards insane level (recent tech stock post earnings have shown it quite well - $DocuSign(DOCU.US)$)

A quick look at the table above shows we are in a much worse position right now, so whenever someone says buy the dip, do not forget the dip might go deeper, never ever catch a falling knife. S&P500 took 5 years to recover from it's highs after the 2008 Global Financial Crisis, holding on to those unrealised losses represents a huge opportunity cost.

A higher CPI also indicates the higher likelihood that the Feds will raise rates to normalise rising prices of goods and services.

A lower labour participation rate will generally lead to lower productivity and thereby reducing GDP growth.

Higher debt levels are an indication of a bigger bubble.

Real earning yields = earning growth - inflation rate, is right now at a negative level, which means the earnings are effectively 'ungrowing'.

All signs pointing towards a bear market.

But one thing for sure is, we can never ever be 100% sure. What I can do is to make a judgement based on economic data gathered, and the following week is a crucial one.

One thing to remember is "Earnings will always determine a share's price in the long term."