When the markets go up at reasonably high level, it is always worth asking is this a bubble or is something else. For everyone who invests in an asset hopes it goes up in value, but when do you sell or take advantage of the higher asset prices? The answer is always in hindsight, you have perfect information, but for the most of us it depends.

A little over 25 years ago, the stock market was going up based on the dot-com bubble. The internet was recently opened to the public and companies that had an idea were getting funded. Everyone thought the dot-com revolution was going to free up time and energy and we would all live a life of semi-leisure, but not surprisingly that did not happen.

In an article by James McGeever of Reuters, in 1999 the top companies by valuation were GE, Citibank, Exxon, Walmart, Home Depot and 5 tech companies The market fell by 65% and it took 14 years to revisit its highs. At its peak, there was a frenzy of public offerings and a raft of companies with shares valued at triple-digit multiples of future earnings. (also there turned out a lot of insider transactions on the public offerings).

This year the top 10 companies by market capitalization are tech companies including Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, Telsa, Berkshire Hathaway and JPMorgan. The combined market cap of the top 10 today is almost $22 trillion or 40% of the S&P 500 index.

Torsten Slok, chief economist of Apollo Global Management the 12-month forward earnings valuation of today’s top stocks is higher than it was 25 years ago. However back then the S&P tech sector was trading at 50 times earnings, as opposed to 29.5 times at the moment.

Linking to dividend paying stocks, the only thing we know for certain is stock prices go up and down. If you have made a lot of money, it is easier to sell something which you made money and buy a defensive stock that pays a healthy dividend. You will leave some money on the table, but you will worry less or can sleep better at nights. We all want more; the question is always how much more and how much risk are you willing to a accept? both now and in hindsight. Trimming a holding is better than saying I should have. If you are an investor, you have will have I should have in your portfolio, for they tend to be long-term holdings by default. Have long-term holdings for a good reason.

There are more questions than answers, till the next time – to raising questions.