Seeking Alpha

Small cap surge outdoes the 90s bubble

  • The Russell 2000 (IWM) is trading for 49x earnings compared with a multiple of 39x at the height of the Internet bubble. The S&P 500 P/E ratio of 17.2x is within spitting distance of its 75-year average.
  • The small cap gauge has returned an average of 30% per year since the March 2009 bottom vs. 25% for the S&P 500, but profits lately are not keeping up. In the last quarter, Russell 2000 profits climbed 6.8% vs. 8.6% for the S&P 500, and while S&P companies exceeded analyst estimates by 4.6%, Russell 2000 companies missed by 13%, according to Bloomberg.
  • "Monetary policy action cannot be taken off the table as a response to the build-up of broad and sustained systemic risk," said Fed Governor Daniel Tarullo recently, sighting bubbly small caps as one thing being eyed at the central bank.
  • ETFs: IWM, IJS, TZA, TNA, UWM, VB, IJR, SLY, EES, RWJ, VBR, VBK, URTY, SCHA, TWM, IWO, IWN, IJT, RWM, SRTY, SAA, DWAS, JKL, VTWO, SLYG, RZV, SLYV, VIOO, SDD, JKJ, RZG, RSCO, SBB, UKK, VTWG, VIOG, TILT, FYX, FNDA, VIOV, XSLV, FYT, SKK, JKK, PXSV, VTWV, EWRS, UVT, TWOK, IESM, SMLV, SJH, FYC, VLU, PXSC, PXSG
Comments (3)
  • PeteCal
    , contributor
    Comments (90) | Send Message
     
    Anybody know of a site where info like this can be compared for these and QQQ,Dow
    24 Mar, 09:25 AM Reply Like
  • jsailor
    , contributor
    Comment (1) | Send Message
     
    I checked two other sites and they show a p/e of 20 TTM. Where does this guy come up with 49? Also, the YTD return is not 4.5%, it is 1.6%. Pays to double check the numbers.
    25 Mar, 12:32 PM Reply Like
  • trnfyt
    , contributor
    Comment (1) | Send Message
     
    Here's a helpful link: http://on.wsj.com/sXXWWp When looking at trailing P/E ratios, it does appear that the Russell index has balooned. However, prices reflect forward-looking estimates. Consensus estimates are for strong growth in 2014 despite a weak first quarter. The real question is: Are the earnings projections reasonable?
    25 Mar, 02:31 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|