Yes, stocks can go down
The S&P 500’s 1.4% drop yesterday, its worst day since April, is a useful reminder that gravity can still exert itself on the market, despite AI excitement, the small-cap swivel and any other number of exciting developments. Speaking of natural laws and the market, stocks have been running far ahead of earnings for a while now, making the S&P — by traditional metrics such as forward price-to-earnings ratios — look pretty expensive. Aside from the Covid-related stock market surge, you have to go back to the tail end of the dotcom boom to see a market this pricey.
