In a special note to CNBC, Bernstein wrote “The last time the FCF [free cash flow] yield for the energy sector was this high relative to either the market or the Tech sector was around the Tech Bubble, and energy outperformed for a decade. The sector’s dividend yield is >3X the S&P 500′s dividend yield.”
Bernstein, who ran strategy at Merrill Lynch, warns today’s “bubble assets” could dramatically hurt investors just like the early 2000s.
“Valuations are very high and what you have to remember is the valuation is more important than the story,” he said.
He gave an example of the internet and cellular communications ruing the 2000 tech bubble. It took over a decade when investors were able to collect profits.
“If you invested in the Nasdaq 100, which were the real companies at the time, it took you 14 years to break even,” said Bernstein. “Something tells me that the people today are not paying attention to valuations, but also aren’t thinking it’s going to take them 14 years to break even.”
Crypto as a ‘monster’ bubble
Bernstein argued that cryptos are a major concern.
