The Trump rally

Then there’s the matter of Yale finance professor Robert Shiller’s cyclically-adjusted price-to-earnings ratio, or CAPE. In a column for Bloomberg View, Ben Carlson, the director of institutional asset management at Ritholtz Asset Management, wrote late last week that the CAPE hit 30, a level that has been reached only twice over the past century – in 1929, on the eve of the famous stock-market crash of that year, and in 1997, a few years ahead of the market’s 2000 high that gave way to the tech and Internet stock meltdown.

As Carlson wrote, the two times the CAPE ratio reached these levels, doom followed in the stock market.

“In 1929, it only stayed above 30 for about two months until Black Tuesday sparked a crash that sent stocks tumbling more than 80 percent from their peak,” he wrote. “It happened again in mid-1997, but stocks and valuations continued to rise. The ratio eventually rose above 44 in late-1999 and stocks ran up almost 85 percent before eventually losing half their value by 2002 after the technology bubble burst.”