Everyone loves a good “How expensive is the US stock market?” chart. And God knows you can conjure plenty of them these days.

On most (or a lot of) key valuation metrics, there are only two comparable periods to the current melt-up: The 2021 “everything bubble” and the dot-com boom in the late 1990s.

Arguably, “this time’s different.” Cue the ominous music that’s supposed to accompany the most dangerous phrase in markets.

The mega-cap leadership in the US exudes the characteristics you want in a “quality” factor, and more importantly, you could make the case that Apple, Google, Microsoft and so on are synonymous with everyday life such that they’re indispensable. We’d be lost without them. I often hear WiFi likened to oxygen these days. It’s an apt comparison.

And on and on. You know the narrative(s) and you surely have your own view on whether this time’s in fact different, or whether it’s all destined to come crashing down like so many Albert Edwards missives say it will.

The point here is just to highlight yet another visual depicting what looks to be yet another valuation extreme with just two modern precedents: 2021 and 2000.

The figure below’s from Goldman’s David Kostin. It shows that although the share of publicly-traded firms with an LTM EV/sales ratio higher than 10x is well below the 2021 peak, the share of market cap represented by such stocks is now 27%, nearly on par with 2021’s high mark, which was itself only exceeded during the dot-com mania.

What’s perhaps most notable about the visual is the disconnect between the two lines. The current episode looks much more like 2000 than 2021 on that score.

Does that matter? Yes. Generally speaking it does in fact matter. Kostin’s been over this before, but this is probably a good time to mention it again, which I assume is why he revisited the point.

Looking back 15 years, stocks that traded richer than 8x on an EV/sales basis struggled dramatically in cases where management came up short on the top-line. Specifically, such names underperformed by 32ppt (!) when missing sales forecasts, which Kostin noted is “double the typical underperformance across other valuation bands.”

At the same time, there was no extra reward for such companies versus the rest of the market when they managed to beat.

As Kostin put it, “the stocks with the highest embedded expectations delivered the same reward to investors as cheaper stocks when beating estimates but experienced more downside when missing growth forecasts.”