Of all the charts that would trouble the thoughtful investor, this one might take the cake:
S&P 500 Profit Margins (yellow line), vs the S&P 500 Index itself (white):
That’s hugely troubling, despite what history might say about it.
Well, now that I’ve mentioned it, what does history say about it?
Here’s virtually the same setup late-2007:
Didn’t end well:
Here it is in late-summer 2000:
Didn’t end well: