Chart of the Week

Record Enterprise-Value-to-Sales Ratios Shows Why Stock Market is So Unstable. It was no surprise to us that an unexpected event like the coronavirus scare of China would spark a major stock market decline. That’s because, as we’ve discussed in recent weeks, the stock market has been vastly overvalued. The market is at record levels by…

S&P 500 Record Price-to-Sales Ratio is Warning Stock Market Trading on Thin Ice.  As the chart below shows, the price-to-sales ratio (P/S) of the S&P 500 is at an all-time high of 2.42. As a result, that’s a major warning sign that the stock market could be in for some rough times.  After all that…

Near-Record Proportion of IPOs Losing Money Is Sign of Trouble for Stock Market. As the chart below shows the proportion of Initial Public Offerings going public with losses remains close to a record high (see chart) of around 70% vs. less than 40% in normal times. As as result, that historically is a clear danger sign…

Biggest Cap Stocks in S&P 500 are Behind its Superior Market Performance: Watch Out!  As the chart below shows, more than 18% of the market cap of the S&P 500 is represented by only five stocks. That’s an historic high.  And since those stocks, mainly in the technology sector (Microsoft (MSFT), Apple (AAPL), Amazon (AMZN)…

Warren Buffett’s Favorite Indicator,  Market Cap to GDP, Signals Stock Market is Way Overbought.  Stock guru Warren Buffett is holding more than $128 billion in cash. That’s about 23% of the value of Berkshire Hathaway  A class stock, and about 60% of its portfolio of public companies.   This huge cash position  should be taken as…