Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

AI Summary. The 5 largest US technology companies are worth about 16% of the global public equity market, and the top 10 US stocks nearly 25%, almost $25tn. The author argues valuations are high but not bubble-level, with the "Magnificent 7" median forward price-to-earnings ratio at 27x, roughly half that of the late-1990s leaders.

Peter Oppenheimer, Sharon Bell, Guillaume Jaisson and Giovanni Ferrannini Goldman Sachs
Date Posted:
Is Database:
Database

Citing a median 24m fwd P/E ratio across the Mag7 of 27x (26x net Tesla) relative to their comps 52x during the Tech Bubble, Oppenheimer argues valuations are “not at levels that are as high as are typically seen at the height of a financial bubble.”

Are Today's Dominant Tech Valuations High Enough To Constitute A Bubble?

Core argument: The 5 largest US technology companies are worth about 16% of the entire global public equity market, exceeding the combined value of the Eurostoxx 50, the UK, India, Japan, and Canada.

The biggest 5 technology companies in the US now have a collective value that exceeds the combined size of the Eurostoxx 50, the UK, India, Japan, and Canada. Put another way, these 5 companies are worth around 16% of the entire global public equity market. The biggest 10 US stocks (8 of which are technology-related) account for nearly 25% of the global equity market, and are worth almost $25 trillion. While stock prices have appreciated strongly, up until now, these have been reflected by powerful and sustained profit growth rather than excessive speculation about the future. [The] the median 24m forward P/E ratio across the ‘Magnificent 7’ is 27x, or 26x if we exclude Tesla (which has a much higher multiple than the other companies). This is roughly half the equivalent valuation of the biggest 7 companies in the late 1990s, while the dominant companies in Japan (mostly banks) traded at higher valuations still; the current EV to sales ratios are also much lower than those of the dominant companies in the late 1990s. So it is true that valuations are high but, in our view, generally not at levels that are as high as are typically seen at the height of a financial bubble.

Takeaways by Macro Roundup® AI

  1. The 5 largest US technology companies are worth about 16% of the entire global public equity market, exceeding the combined value of the Eurostoxx 50, the UK, India, Japan, and Canada.
  2. The 10 biggest US stocks, 8 of them technology-related, are worth almost $25 trillion and account for nearly 25% of the global equity market.
  3. The median 24-month forward P/E for the "Magnificent 7" is 27x, or 26x excluding Tesla, roughly half the equivalent valuation of the biggest 7 companies in the late 1990s, whose EV/sales ratios were also higher.

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