Bull Market Intact, But Valuation Risks Are Rising
The bull market remains intact, driven by AI optimism, strong earnings expectations, and rapidly improving sentiment.
However, with mega-cap valuations becoming increasingly stretched and investors once again pricing in perfection, the line between sustainable growth and speculative excess is beginning to blur.
1.US Stockmarket Valuations
-Mega Caps= Very Expensive
-Large Caps = Expensive
-SMID Caps = Cheap
👀 🧐 🤔 $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $Dow Jones(.DJI)$
2.Stocks are an Anticipatory Asset.
Investors buy and sell based on their anticipation of where things are headed.
Do this at scale and you have a prediction machine (albeit one liable to the normal human foibles)
3.Sentiment has snapped back from the Q1 "healthy correction"
Healthy corrections scoop some of the froth off the top, shake-out weak hands, and most importantly; don't damage the trend.
(but it does make you wonder how long we can keep extending this bull market...)
4.The Bubble.
Bubbles are a constant through history because humans are a constant through history.
We will have more bubbles in the future and people will probably behave more or less the same way every time.
We can of course as individuals at least try to learn from history…
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