Man Group examines how over one‑fifth of the MSCI World index now trades at EV/sales multiples above 10x—levels last seen during the dot‑com bubble—raising questions over whether these elevated valuations, driven by AI exuberance, can justify future returns amid normalized interest rates. Historical data warns such extreme valuations tend to underperform significantly over time, while valuation dispersion suggests select opportunity still exists outside concentrated tech.
The Wisdom of Buying Absurdly Expensive Stocks (Or Not!)
Man Group
Research
11 Pages
Key Takeaways
Bubble‑like valuations: Stocks trading above 10x EV/sales now comprise over 20% of MSCI World—a dot‑com era echo.
Historical underperformance: Stocks with EV/sales above 10x have shown median 33–65% five‑year underperformance; non‑performance sustains.
Selective value remains: Despite concentration risk, normal dispersion levels outside Japan may preserve value opportunities for discerning investors.
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