Never let it be said former Republican Congressman Ron Paul doesn’t have a knack for theatrics. Late last week, he commented that we’re now in the midst of the “biggest bubble in the history of mankind.”

His concern isn’t entirely unmerited. Total household debt in America just reached record levels, and total government debt now hovers a little above $21 trillion.

Just for the record, however, this is a warning bell Ron Paul has been ringing since 2014 — and really, before that — and so far it has not happened. With Q2 earnings projected to rise a hefty 26.7% year-over-year and with expectations of Q2 GDP growth rate in excess of 4%, it seems unlikely the market, and the economy itself, are more vulnerable now than they were then.

The assessment does raise one critical question though: If this is indeed a massive stock market bubble, when might it finally pop and pull the rug out from underneath us?

Stock Market Bubble?

If this is indeed a bubble, it’s the healthiest one we’ve seen … ever.

Then again, whether or not this is a bubble depends on how you define bubble.

While the definition is broad and vague, most bubble arguments start and often finish with equity markets being overvalue relative to a “more normal” standard. To that end, the S&P 500’s trailing GAAP P/E of 24.2 (assuming Q2 earnings estimates are on target) is anything but cheap.

It’s also anything but rampant though. That’s more or less where the market’s been valued since 2016, and bear in mind that — despite the string of rate hikes we’ve seen over the past few quarters — rates are still historically low. We were told ad nauseum back in 2014 and 2015 that rock-bottom interest rates justified above-average stock valuations. Now, for no particularly clear reason, some are saying the theory’s underpinnings have completely changed.

Or, just maybe investors are looking ahead of them rather than looking behind them. The S&P 500’s forward-looking operating P/E is a much more palatable 16.8, though the projected twelve-month GAAP P/E isn’t all that unpalatable at 18.2. For that matter, the S&P 500’s trailing operating P/E (and operational results have been the most-watched yardstick for years now) of 20 is actually very much in line with norms.

And for the record, the second quarter’s overall earnings growth pace is modeled right around 26.8%. For all of 2018, per-share profit growth for the S&P 500 is modeled at right around the same.

The market’s most-watched stocks certainly aren’t setting a tone of bubbliness either. Apple (NASDAQ:AAPL) is priced at an affordable 18.4 times its trailing earnings, while only trading at 14.4 times next year’s expected income. Mega-bank JPMorgan & Chase (NYSE:JPM) is valued at 15.6 times its trailing income, and prices at 11.2 times 2018’s earnings outlook. Johnson & Johnson (NYSE:JNJ) is valued at only 11.2 times its projected profits.

There are plenty of pricey exceptions to the average. Amazon.com (NASDAQ:AMZN), for instance, is trading at a trailing P/E of almost 230, and a forward-looking multiple of 90. That’s ridiculous, plain and simple. AMZN stock isn’t a stock that’s priced, valued or seen like any other equity though. Most traders see its habitually wild valuation and know they can chalk it up to “that’s just Amazon.”

Nevertheless, Amazon’s sky-high valuation still skews the broad market’s collective valuation higher, along with other richly-priced names such as Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Facebook (NASDAQ:FB). The former is trading at 25 times next year’s expected profits, while the latter is valued at a forward-looking P/E of 22.4. Crazy. Just as crazy is the fact that Facebook is on pace to grow its top line to the tune of 40% this year, while Alphabet is on pace to beef up its top line by 24% … and it’s a very reliable growth company.

Bottom Line

There’s the rub. Stocks are expensive, though not uncomfortably so, but companies are also growing their revenues and incomes at levels commensurate with current valuations. That’s all happening against a backdrop of great economic growth. The second quarter’s GDP growth outlooks from all the experts peg it at a pace in excess of 4%, which is the best reading we’ve seen in a long, long time when compared to non-negative quarter.

That’s the part of the discussion Ron Paul seems to be skipping. Stocks are expensive, but unlike bubbles of the past, earnings are still growing. GDP growth is still accelerating.

There will be a time when both trends reverse. It’s difficult to see that time on the near or even distant horizon though.

So, to answer the question of when this stock market bubble might pop, any answer has to be prefaced with the reality that this isn’t actually a bubble. Frothy? Sure, and ripe for a corrective move. That’s normal. Our current situation isn’t anything like 2008 or 200 though. Before he says anything else, Paul needs to defend his bubble thesis in light of the economic and earnings growth at hand. There’s a reason most other observers aren’t seeing the same stock market bubble he is… because there’s not one like the one he’s describing.

When earnings start to shrink and the GDP starts to contract, that’s when you need to worry.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.

Legendary Investor Louis Navellier’s Trading Breakthrough

Discovered almost by accident, Louis Navellier’s incredible trading breakthrough has delivered 148 double- and triple-digit winners over the past 5 years — including a stunning 487% win in just 10 months.

Learn to use this formula and you can start turning every $10,000 invested into as much as $58,700.

Click here to review Louis’ urgent presentation.