Important to note are the differences between the three instances of the 21st century where long-term returns for equities have been reduced (causes discussed in the Third Wave Finance article entitled The Orchestration of Debt-Based Expansions):
While the tech./internet bubble was concentrated in one sector and in large-sized companies, the real estate bubble was concentrated in housing and was somewhat more spread out among different sizes of companies.
Yet in the current instance — where elevated prices have resulted from “yield-seeking” (i.e. accepting more investment risk due to low interest rates) and experimental monetary policy (i.e. large-scale asset purchases — LSAP, QE, etc.) — the overvaluation is even more spread out among many different sizes of companies; because this overvaluation is “distributed”, index-based and median-sized stock valuations show different results… To explain further: when comparing the tech./internet overvaluation to the current one, using a cap-weighted valuation method shows that the tech./internet bubble was more overvalued; yet when a comparison is made using a median-sized stock valuation one can see that, based on this method, the current stock market overvaluation is the most extreme in U.S. history.
Chart source: John Hussman’s weekly market comment entitled Sizing Up the Bubble