Mark Cuban says here’s how you’ll know the rally is over

Billionaire Mark Cuban said the stock market’s valuation doesn’t remind him of 1999′s dotcom boom.  He said Wednesday that the stock market is not reminiscent of 1999 because…

“Interest rates were a lot different back then,” Cuban said on CNBC’s “Fast Money Halftime Report.” “And you saw a lot more people participating in the market…You don’t see that now. That individual day trading really led the market to be frothy.”

The levels of day trading have receded and given way to the rise of index funds, creating a fundamentally different landscape, Cuban said.

“There’s so much money chasing index funds, so as long as those funds keep on growing the market is going to go up,” said Cuban, who sold Broadcast.com to Yahoo in April 1999 for $5.7 billion.

Cuban’s comments Wednesday were in response to concerns from investors who are comparing the stock market’s current valuation to the bull market in 1999 that concluded with collapse of the dot-com bubble.

Highly speculative internet stocks helped propel the tech-dominated Nasdaq up more than 500% from 1995 until the bubble burst in March 2000.

On Tuesday, for example, billionaire investor Paul Tudor Jones called the stock market “crazy.”

“We are just again in this craziest monetary and fiscal mix in history. It’s so explosive. It defies imagination,” Jones said on CNBC’s “Squawk Box” on Tuesday at the World Economic Forum in Davos, Switzerland.

“It reminds me a lot of the early ’99. In early ’99 we had 1.6% PCE, 2.3% CPI. We have the exact same metrics today,” he continued.

But like Cuban, Jones noted the difference in interest rates in 1999 and 2020. In the early half of 1999, the Federal Reserve had set interest rates at 4.75%. They are currently between 1.5% and 1.75%.

In fact, Cuban, who owns the NBA’s Dallas Mavericks, said interest rates will ultimately determine the fate of the stock market, which continues to move toward the upside in 2020 after a strong 2019.

The S&P 500 is up around 3% year-to-date and its 29% gain in 2019 was its best annual performance since 2013.

As long as rates stay this low, Cuban said…

Continue reading at CNBC.com

 

 

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