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In a recent Wall Street Journal article, Goldman Sachs compared the top 5 companies in 2000 to the top 5 companies today. In that comparison, Goldman concludes that the market is not repeating the problems of 2000 that caused the stock bubble in today's market.

The top 5 companies in the S&P 500 today are:

  1. Facebook Inc.  (FB $254.7500),
  2. Apple Inc.  (AAPL $111.8100),
  3. Inc.  (AMZN $3128.9900),
  4. Microsoft Corp.  (MSFT $207.4200),
  5. Alphabet Inc.  (GOOGL $1459.8200).

and of 2000 were:

  1. Microsoft,
  2. Cisco Systems Inc.  (CSCO $---.--),
  3. General Electric Co.  (GE $---.--),
  4. Intel Corp.  (INTC $---.--),
  5. Exxon Mobil Corp.  (XOM $---.--).

The five companies in 2000 traded at 47 times expected earnings, according to Goldman. Today’s five biggest companies trade at 30 times expected earnings—making them by no means a bargain, but still less expensive than the stocks that dominated the stock run in the early 2000s.

The tech giants powering the S&P 500 today also reinvest far more of their profits into their businesses than their predecessors did. The five companies funnel about 48% of their cash flow from operations into capital expenditure and research and development spending, according to Goldman, well above the S&P 500’s 21% average and the 26% average for the five biggest companies in March 2000.

According to Goldman, "Lower growth expectations, lower valuations and a greater reinvestment ratio suggest the current concentration may be more sustainable than it proved to be in 2000."

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