Are You Ready For a Crash?
Are You Ready for a Crash? A Familiar Setup, Not a Doom Prophecy PESAWALA , as an experienced market participant, has traded through many cycles, and the setup now facing the Nasdaq looks familiar. This is not a prediction of doom; it is a recognition of gravity. The Nasdaq is priced for perfection, and perfection rarely survives the holiday season. Valuation: Paying for Perfection The first pillar of the argument is valuation. By almost any historical measure, the Nasdaq is expensive. The index’s price-to-earnings ratio sits far above its long-term average. This is not a minor deviation; it is a wide gap. When investors pay a high multiple, they are borrowing future returns. They are assuming growth will be flawless. But growth is never flawless. The economy cools, margins compress, and the multiple contracts. Interest Rates & Long-Duration Tech Interest rates make the problem worse. Money is no longer free. The Federal Reserve has kept rates elevated. Higher rates reduce the pre...
