14. September 2018

Why the stock market could face a difficult time

According to the Leuthold Group, the median price-to-sales ratio (P/S) has almost doubled since the dot-com era. The cap-weighted P/S is at the same level as at the peak of the tech bubble.

Source: Chang, S.: „Behold the ‘scariest chart’ for the stock market“, MarketWatch, 09 August 2018,
accessed 16 August 2018,, Link to the article

Comment: P/S is an interesting ratio to value the stock market. Sales are less volatile than earnings and also less sus-ceptible to manipulation. The current overvaluation is much broader compared to the 2000s. If history is any guide, the current overvaluation could become a problem.

About Ivan Disch