No. of Recommendations: 25
I thought this might be fun - looking a little bit beyond the AI crowd, what does the valuation of US industrials look like in general, compared to the most famous bubble in history?
Finally, a practical use for the Dow Jones Industrials index!
TL;DR:
Based on the overall profits and overall market cap then and now, one might conjecture that the market is currently 43.5% more richly valued than it was just before the crash of 1929.
That's the figure for the set of industrials taken together; the median now is 22.7% more richly valued than the median back then: the middle of the pack big company, not the fashionable outlier in profitability.
[Arguably stocks weren't in fact overvalued in 1929, they were just undervalued in the following few years, but the following few years were very bad for investors anyway so the difference is perhaps moot]
This assumes that estimates for full-year 2026 earnings come out to be right, though they are usually on the optimistic side. So the gap might be a bit bigger.
There is no cyclical adjustment on profits, but that would justify higher multiples only if they were cyclically depressed, which wasn't the case then and isn't the case now, so I'll assert that it doesn't much matter.
Market caps as at August 1929, net earnings for full year 1929
Market cap ($bn) Earnings ($bn) Earnings Yield P/E
General Motors 3,132.00 236.5 7.55% 13.24
General Electric 2,852.00 77.3 2.71% 36.90
U.S. Steel 2,086.10 172.4 8.26% 12.10
Standard Oil of New Jersey 1,753.10 120.9 6.90% 14.50
Union Carbide & Carbon 1,114.10 35.4 3.18% 31.47
Anaconda Copper 1,060.30 69.1 6.52% 15.34
Woolworth (F.W.) 967.7 35.7 3.69% 27.11
Standard Oil of California 963.4 46.6 4.84% 20.67
Allied Chemical & Dye 762.3 27.4 3.59% 27.82
Sears, Roebuck 754.8 30.1 3.99% 25.08
Texas Company 685.7 48.3 7.04% 14.20
Radio Corp. 647.5 11.5 1.78% 56.30
Reynolds Tobacco 603.5 32.2 5.34% 18.74
International Nickel 598.9 20.2 3.37% 29.65
International Harvester 590.2 31.3 5.30% 18.86
Eastman Kodak 483.9 21.6 4.46% 22.40
American Radiator & Standard Sanitary 478.6 19.4 4.05% 24.67
Standard Brands 476.3 17.3 3.63% 27.53
American Can 440.4 19.8 4.50% 22.24
Kresge (S.S.) 438.7 14.8 3.37% 29.64
National Biscuit 436 19.7 4.52% 22.13
Kennecott Copper 418.9 52.1 12.44% 8.04
American Tobacco 394.3 27 6.85% 14.60
Burroughs Adding Machine 352.5 11.7 3.32% 30.13
General Foods 340.5 19.4 5.70% 17.55
Bethlehem Steel 331.5 35.2 10.62% 9.42
United Fruit 314.3 17.8 5.66% 17.66
Pullman, Inc. 290.3 17.7 6.10% 16.40
Timken Roller Bearing 261.5 14.2 5.43% 18.42
Chrysler Corp. 300.9 21.9 7.28% 13.74
American Smelting & Refining 226.9 18.3 8.07% 12.40
Westinghouse Air Brake 203.8 8.8 4.32% 23.16
Goodyear Tire & Rubber 204.5 13.1 6.41% 15.61
National Cash Register 151.6 6.2 4.09% 24.45
Paramount Publix 146.7 15.5 10.57% 9.46
St. Joseph Lead 138.9 7.5 5.40% 18.52
American Locomotive 94.2 4.2 4.46% 22.43
Allis Chalmers 90.8 4.3 4.74% 21.12
Stewart Warner 84.2 6.8 8.08% 12.38
U.S. Rubber 75.3 -2.7 -3.59% NMF
International Paper 74.3 -4.3 -5.79% NMF
Briggs Manufacturing 73.6 2.4 3.26% 30.67
Twentieth Century Fox Film Corp. 65 8.4 12.92% 7.74
American Sugar Refining 35.3 3.5 9.92% 10.09
Abitibi Paper 27.5 1.9 6.91% 14.47
Endicott Johnson 26.6 2 7.52% 13.30
Armour and Co. 13.5 0.8 5.93% 16.88
Cuban American Sugar 12.8 1.1 8.59% 11.64
American Woolen 6.6 -4.2 -63.64% NMF
International Mercantile Marine 3 2.4 80.00% 1.25
Sum 26085.3 1420.5 5.45% 18.36 Overall
5.37% 18.63 Median
Market caps as at July 17 2026, consensus estimated earnings for full year 2026
Market cap ($bn) Earnings ($bn) Earnings Yield P/E
NVIDIA 4912.0 215.49 4.39% 22.79
Apple 4901.0 126.46 2.58% 38.76
Alphabet (Google) 4223.0 141.20 3.34% 29.91
Microsoft 2925.0 123.00 4.21% 23.78
Amazon 2659.0 85.28 3.21% 31.18
Walmart 909.1 23.12 2.54% 39.33
JPMorgan Chase 906.7 60.85 6.71% 14.90
Visa 681.9 23.00 3.37% 29.65
Johnson & Johnson 609.1 28.30 4.65% 21.52
Cisco 441.2 16.68 3.78% 26.46
Caterpillar 405.4 10.53 2.60% 38.50
UnitedHealth 387.0 16.55 4.28% 23.38
Chevron 373.2 18.53 4.96% 20.14
Coca-Cola 350.9 14.09 4.02% 24.90
Procter & Gamble 349.2 16.28 4.66% 21.46
Home Depot 337.9 14.74 4.36% 22.93
Merck 314.9 6.77 2.15% 46.51
Goldman Sachs 314.2 17.55 5.58% 17.91
American Express 242.5 12.00 4.95% 20.21
IBM 199.9 10.78 5.39% 18.54
Amgen 197.7 11.97 6.05% 16.52
McDonald 190.2 9.34 4.91% 20.36
Walt Disney 169.6 13.35 7.87% 12.70
Boeing 168.7 0.68 0.40% 249.96
Salesforce 139.9 12.03 8.60% 11.63
3M 83.4 4.53 5.43% 18.42
Sherwin-Williams 81.7 2.87 3.51% 28.47
The Travelers Companies 78.5 5.91 7.53% 13.28
Honeywell 71.3 6.65 9.32% 10.73
Nike 64.9 2.34 3.60% 27.76
Sum 27688.9 1050.82 3.80% 26.35 Overall
4.37% 22.86 Median
This is not to say that the market is about to crash--they're just numbers, so don't blame them. Prices can do anything, for a while. I merely observe that sometimes if you stay out in the sun too long you can get burnt.
Jim
Data for 1929 is from table A2 in the appendix of the Minneapolis Fed paper "The 1929 Stock Market: Irving Fisher Was Right"
For the current figures, I pulled up the market caps from some rando web site (companiesmarketcap.com), and used Value Line's 2026 net income estimates which are famously close to consensus but handily calendar aligned.
Side note: in both tables, this of course is only the industrials. If you sum in the market caps of the utilities and the railroads, the overall market P/E in August 29 was 19.0 rather than 18.4 for just the industrials, because utilities were richly priced. The fed paper discusses, almost ad nauseam, how this subset was in fact quite representative of the entire market.
