The kingdom of stocks is divided into two parts, value

and growth.

With value stocks you pay a reasonable price

for a slice of a company's profits.

Value stocks, in a word, are cheap.

In this category today, for example,

we find almost all banks and many industrials.

With growth, by contrast, you pay up

for a slice of rapidly rising revenues or profits.

In this category we typically find biotechnology, software,

and hot retail stocks.

Now, as this chart from STAR Capital shows,

you've never had to pay more for growth relative to value

than you do today.

Indeed, the differential in valuation

was last this great or almost this great back in 1999,

just before the dotcom bubble burst.

And as it was two decades ago, technology is leading the way.

Look at the price-to-earnings multiples of Microsoft, Google,

Facebook, and Amazon, compared to that of the S&P 500.

There really is no comparison.

But in other ways the story is very different today.

In 1999, the tech stocks that led the market

were largely speculative.

Now, the leading companies have very high, almost monopoly-like

profits.

This chart from The Leuthold Group tells that story.

Returns at the top quartile of American companies

continue to rise steadily, while returns at all other companies

are slowly slipping away.

The stock market has staged a remarkable rally

in recent weeks and has had a fantastic decade.

But ask yourself these two questions.

One, what does this extremely unequal distribution of profits

say about the overall health of the American economy?

And two, how long will it be before tax authorities

or antitrust regulators step in to spoil the party at the most

dominant companies?