Keep pulling the thread on S&P 500.
NVIDIA's stock price has almost quadrupled over the past two years.
NVIDIA is currently the most valuable company in the world.
NVIDIA currently has a market valuation of $4.6 trillion.
The S&P 500 index has increased by almost 50% over the last two years.
The recent growth in the S&P 500 has been primarily driven by a small number of AI-focused companies, including Microsoft, Amazon, and Meta.
NVIDIA's $4.6 trillion valuation is equivalent to 22 times the valuation of The Walt Disney Company or five times that of JPMorgan Chase.
Robyn Greenwood and his colleagues were motivated by Eugene Fama's challenge to empirically prove the existence of bubbles, leading to their research on statistically identifying them.
In their research on market bubbles, Robyn Greenwood and his colleagues analyzed nearly a century of U.S. stock market data, identifying all instances where an industry's stock prices doubled or more within a two-year period.
Of the 40 historical instances of rapid industry stock price increases identified by Robyn Greenwood's research, approximately half resulted in a dramatic crash within a few years, while the other half did not.
The "Bubbles for Fama" research identified four main indicators of a potential market bubble: high valuations, high volatility, high new stock issuance, and accelerating price increases.
According to Robyn Greenwood's research, accelerating stock price increases is one of the strongest predictors of a market bubble.
NVIDIA's current price-to-earnings (P/E) ratio is in the 40s.