BUBBLE 3.0: A BLAST FROM A BUBBLE PAST

SUMMARY
  • The tech bubble in the late 1990s set off a chain of events that led to Bubble 2.0 in the mid-2000s, and the bubble in which we presently find ourselves

  • Recent IPOs such as Uber, Lyft and Beyond Meat underscore the rank speculation of securities valued on considerations other than profits

  • Over 80% of IPOs coming to market currently are earnings-free, the highest rate since 2000

  • One major divergence from Bubble 1.0 is that many outrageous valuations go well beyond tech

  • However, despite this fact, we are living in a two-tiered market where, just like in 2000, there are a multitude of companies that are reasonably valued

  • Additional parallels with Bubble 1.0 are the regulatory attacks on tech, the war then vs the war now, the yield curve and current economic conditions

  • Evergreen’s view is that a simple buy-and-hold approach with an S&P 500 index fund won’t cut it in this environment

  • Just as in 2000, allocating away from bubble-infested parts of today’s stock market is essential, as is selling into rallies and buying into weakness

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