“It’s not as obvious a bubble as it was 20 years ago,” said Jay Ritter, a finance professor at the University of Florida who studies initial public offerings. “But we are close to the bubble territory.”
The market appears to be overheated by another indicator that investors often use to determine how cheap or expensive a stock is: its price in relation to the profits it expects to make. Currently, the so-called price / profit index for S&P 500 companies is above 22, and has been for most of the year. The last time the market was consistently above that level was in 2000.
Small investors pile up
The appetite of individual investors was an unexpected by-product of the pandemic. For many, stock trading began as a way to quench their speculative itch when other avenues, such as games of chance, were effectively closed.
Tim Mulvena, a 32-year-old medical software vendor from Oneonta, NY, was one of them. He first accessed Robinhood, a free-trading application popular with small investors, in March and started buying shares while markets were collapsing.
“I have to move and see where it takes me,” said Mulvena.
He made gains of about 60% at Apple, his biggest position. And his investment in Penn National Gaming, a regional gambling company that bought Barstool Sports, a digital sports website that Mulvena was a fan of, more than doubled.
The second stimulus
Answers to your questions about the stimulus law
Updated December 23, 2020
Lawmakers agreed to a plan to issue $ 600 stimulus payments and distribute $ 300 federal unemployment insurance over 11 weeks. You can find more information about the invoice and what it offers here.
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- Will I receive another stimulus payment? Individual adults with adjusted gross income on their 2019 tax returns of up to $ 75,000 per year would receive a payment of $ 600, and heads of households earning up to $ 112,500 and a couple (or someone whose spouse died in 2020) earning up to $ 150,000 per year would receive double that amount. If they have dependent children, they will also receive $ 600 for each child. People with income just above these levels would receive a partial payment that decreases by $ 5 for every $ 100 of income.
- When can my payment arrive? Treasury Secretary Steven Mnuchin told CNBC that he expected the first payments to be made before the end of the year. But it will take a while for all eligible people to receive their money.
- Does the agreement affect unemployment insurance? Lawmakers have agreed to extend the amount of time that people can receive unemployment insurance and to restart an extra federal benefit that is provided in addition to the normal state benefit. But instead of $ 600 a week, it would be $ 300. That would last until March 14th.
- I have my rent late or I hope to be soon. Will I get any relief? The deal would provide $ 25 billion to be distributed by state and local governments to help tenants who are left behind. To receive assistance, families would have to meet several conditions: Family income (for 2020) cannot exceed more than 80% of the area’s average income; at least one family member must be at risk of homelessness or housing instability; and individuals must qualify for unemployment benefits or have experienced financial difficulties – directly or indirectly – because of the pandemic. The agreement provided that care would be given priority to low-income families who have been unemployed for three months or more.
Even those who remained with less active investments – such as 401 (k) investors who earnestly contribute to plain vanilla index funds – have gained from the upward trend in the market, attracting new income. Bank of America Merrill Lynch analysts recently cited “sparkling prices, greedy positioning” as the reason for huge inflows into stock market mutual funds and exchange-traded funds in the past six weeks.
As they did in the 1990s, smaller investors are pouring money into technology-focused fashion companies, many of which saw their businesses gain strength during the pandemic. His favorites include cloud computing software maker Snowflake, online surveillance company Palantir and energy storage company QuantumScape, which increased 144% in December alone. Investors also like Etsy, the online market, which has grown 330% this year. Just over a week ago, 908 Devices – the maker of portable analytical devices – rose about 150 percent in its commercial debut.