Russellmania—Poster Boy For The Everything Bubble

It doesn’t get more “irrationally exuberant” than this. Yesterday the Russell 2000 (RUT) closed at an all-time record of 1648 — meaning that it was valued at 91X reported net income (March LTM) and that it sported a diminutive dividend yield of just 1.25%.

In some sense, of course, the RUT’s stratospheric PEs are fully consistent with current manic stock valuations generally. What we have, in fact, has been called the Everything Bubble because there is virtually no asset class where valuations have not been drastically inflated by nine years of egregious central bank money pumping.

Yet the Russell 2000 index of small and mid-cap domestically oriented companies surely stands at the very front of this inflated assets parade. Even compared to its own previous bubble peaks it is just plain off the charts — with the current PE multiple of 91X  (updated from the chart to yesterday’s pricetowering above the 60X level recorded at the December 2007 peak and 55X at the December 1999 peak.



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