It has taken an amazing 15 years for the Nasdaq to reach new highs, and now Jim Cramer is hearing chatter of a new bubble forming. So, what?
"First, let me just say that it does your career no harm to call this move a bubble. If the market implodes, you look like a genius. If it doesn't, who cares? You're just early," said the "Mad Money" host.
Could the market really be headed toward a bubble?
To find out, Cramer compared the market then versus now to see if the situations are alike. First, there is the market leader, Apple. Cisco was the leader back in in 2000, with a market cap of $550 million. Apple now has a $736 billion market cap.
Yet anyone who follows Cramer knows that he values stocks by looking at their price-to-earnings multiple. While the average stock is trading at just 18 times earnings currently, Apple now sells at approximately 15 times earnings.
In the last bubble, Cramer argues that Cisco sold at about 80 times earnings. That is a huge difference!
"I struggle to figure out why the Nasdaq isn't higher, why the valuations aren't bigger, especially given our low inflationary environment," said Cramer.
So, until he sees evidence of stocks being overvalued, or the 10-year Treasury yield even goes above 2 percent, he's not buying it. He will believe it when he sees it, and the proof is not in the pudding right now.