Thanks for the article and interesting charts. Your argument boils down to "This time is truly different".
Some things to explain apparent disconnects that do not invoke paradigm shifts:
1. Concentration: The US stock market has seen several time periods (particularly in the 1920s and 1960s) where the entire capitalization of the market was concentrated into a few stocks. In fact, the top 5 stocks were worth well north of 20% in these earlier time periods. Therefore, FAANGM dominance is not that unusual.
2. Valuations: Right now, the valuation of the market ex-tech is quite reasonable and valuation excess is concentrated in XLK/XLC stocks and AMZN. In the late twenties, the valuations of the industrials, banks and transports were quite reasonable on metrics such as P/E, P/B, P/S and the most valuation excess was in utility stocks. In fact, one can argue that AMZN, FB, GOOGL, even MSFT have unregulated utility-like characteristics. This type of valuation excess in a particular sector has happened before. Growth stocks have outperformed value stocks for significant periods of time prior to the 1940s.
3. Innovation: The new technologies/business concepts of the first quarter of the 20th century such as air travel, telecommunication, automobiles, electrification, mass production of chemicals, etc were arguably more significant quality-of-life enhancers than social media and video games. On the other hand, semiconductor chips and software are definite productivity enhancers in the modern age. Others such as e-commerce are conceptually similar to mail order catalogs of yesteryear.
To summarize, I agree there are indications of a secular shift. But I would argue that this secular shift is merely "apparent", and not real. It is a convenient ruse to hide underlying phenomena such as economically inefficient credit creation, excessive leveraged speculation, technology-induced deflation, irresponsible fiat money creation, rentier capitalism, divergent economic class interests, etc that have all been seen in prior decades and centuries.
Spot on! Blow up phase.
