英伟达很贵？可能会更贵 | 经济学人

Finance and economics | Buttonwood

Think Nvidia looks dear? American shares could get pricier still

Investors are willing to follow whichever narrative paints the rosiest picture

A shoe shiner polishing shoes worn by a bull.

How can you tell it is time to get out of the market? In 1929 Joseph Kennedy, an American businessman and politician, supposedly realised the party was over upon hearing a shoeshine boy dispensing stock tips. In 2000 the exit doors beckoned after 17 “dotcom” firms paid millions of dollars each for brief advertising slots during the Super Bowl, an American-football extravaganza.

And so to a sell signal fit for 2024: Keith Gill is back on social media. Mr Gill was an architect of the meme-stock frenzy of 2021, exhorting retail traders to buy shares in GameStop, a struggling chain of video-game shops. After a three-year absence he is posting once again, now apparently in possession of a stake in the firm worth a few hundred million dollars. GameStop’s share price has resumed a gut-churning roller-coaster ride and is up by more than 40% since Mr Gill’s return; the ailing company has made use of the excitement to issue some $3bn-worth of new shares. If you are looking for signs of speculative excess in markets, this is Exhibit a.

America’s benchmark s&p 500 share index is hitting new highs every other week, fuelled by enthusiasm about artificial intelligence (ai). On June 18th this made Nvidia, a chip designer, the world’s most valuable firm. The cyclically adjusted price-earnings ratio, popularised by Robert Shiller of Yale University, is at nearly 36. It has been higher only before the crashes of the early 2000s and 2022—and even then, not by much. That a correction will arrive at some point seems a racing certainty, but in the meantime there is a still more worrying prospect. As far as it has come, the rally may yet have further to go.

After all, pricey shares can always get pricier if investors keep bidding them up. To see why they may now be especially prone to a melt-up, consider the concept of “duration”. This is typically applied to bonds, and is similar to their maturity. It is the average time until a bond’s future payouts, including both coupons and repayment, weighted by the size of each payout. Unusually in financial maths, which tends to be messy, duration has a rather elegant meaning: it is the sensitivity of an asset’s price to changes in interest rates. A long-duration asset—a 50-year bond, say—is hammered by rising interest rates, and appreciates a lot if they fall. Cash, the value of which is invariant under such changes, has a duration of zero.

What about shares? Intuitively, those that derive much of their value from earnings in the distant future must be closer in duration to the long-maturity bond than to cash. So must stocks with a high price-to-earnings ratio, since it will take many years of profits to repay their initial cost. In other words, America’s stockmarket—expensive overall, and led by tech behemoths promising an innovation-fuelled bonanza—has a very long duration.

Interest rates, meanwhile, are now poised to fall. True, at the last meeting of the Federal Reserve’s rate-setting committee, which finished on June 12th, the median member expected only one cut before the end of 2024, down from three. But more significant was the fact that share prices rose on the news, suggesting investors had anticipated hawkishness rather than (as so often in recent years) underestimating it. Rates traders also expect the Fed’s short-term rate to finish the year in line with its officials’ projections. Markets have tended to be more doveish than the Fed, leaving scope for surprises that send bond yields up and long-duration assets down. Now, provided the Fed’s next move really is down, the shoe is on the other foot.

There is an obvious counter to all this: that the recent buoyancy of share prices, in spite of rising bond yields, shows duration analysis to be drivel when applied to the stockmarket. A theoretician might reply that share prices have soared in spite of the downward pressure from interest rates, with expected future earnings being marked up by more than enough to compensate.

It would probably be closer to the truth to say that just now, for whatever reason, investors seem willing to buy whichever narrative paints the rosiest picture. At the end of 2023 this was that bond yields were falling and monetary policy would soon follow. This year, as such hopes have faded, it has concerned ai and the resilience of America’s economy. Do not be surprised if duration is soon back in the spotlight once a good-news story can be spun around it. Mr Gill’s first appearance did indeed herald a crash, but only after plenty more euphoria. The shoeshine boys, your columnist hears, are not yet all-in.