This is not like the Dotcom bubble

UBS senior financial market adviser Burkhard Varnholt says the differences between today’s market and the dotcom era are greater than the similarities. He points to strong earnings growth, structural investment momentum and robust economic data.

Varnholt says major technology companies are generating record cash flows, unlike the dotcom era, when price-to-earnings ratios had become disconnected from reality and earnings mattered little. UBS argues that earnings momentum and productivity growth distinguish a market driven by rising earnings from one driven solely by a narrative.