An Important Difference Between The All-Time-High Stock Market Today And The Dotcom Bubble Of The 90's

The S&P 500 surged and set a new all-time high on Tuesday.

Without looking below the surface of the nominal number of the index, some folks will attempt to compare what we're seeing today to what we saw before the crash of 1929 or 2000 or whenever the stock market last fell after hitting an all-time high.

"In many meetings we've had with investors, really starting last fall, the phrase "bubble" or year 1999 has been referenced as relevant," wrote Morgan Stanley's Adam Parker. " The "price to opportunity" and "price to eyeballs" metrics that appear to be justifying recent tech deals and software and internet valuations are fueling this sentiment."

Parker looked a little below the surface in a research note this week, and he shared a key difference between the stock market today and the dotcom bubble of the 1990's.

"About 40% of all technology stocks have price-to-sales levels above 5x today, levels seen briefly during the early 1970s but otherwise only during the internet bubble buildup and unwind," he noted.

Because the high-flying tech stocks of the dotcom bubble had no earnings, investors looked to the price-to-sales ratios.

Parker dug even deeper.

"Most of the highly priced stocks are not the mega caps that dominated the expensive spectrum during the internet bubble," he wrote.

This is not to say there aren't overpriced tech stocks that could crash. Rather, they just don't account for as big a share of the market as they did in the past.