Bleakley Financial Group’s Post

The US has been in a textbook bull market for 15 years now! In this post, I will explain how I use this chart as a quick guide to understanding how cheap or expensive the US stock market is. Technical Analysis Below is a chart of the S&P500 also known as the Standard & Poor's 500. It is a stock market index that measures the performance of the top 500 publicly traded companies in the United States. It is widely regarded as one of the best indicators of the overall health of the U.S. stock market and is considered a benchmark for the performance of the broader economy. I use this chart as a quick guide to see where the market is currently at. Below the green line, I consider it extremely cheap. From the green line to the white dotted line, I consider it cheap. At the white dotted line, I consider fair value. From the white dotted line to the red line I consider it fairly expensive. Above the red line is expensive. Some interesting notes- The market spends most of its time above the white dotted line. So just because it becomes expensive it is not a reason to sell. Especially when you factor in taxes. Usually, it's best to just hold long term and sit on your hands and do nothing. This chart also gives a great perspective as it is zoomed out allowing us to see the multi-decade-long trend. You may have heard the saying, “When in doubt, zoom out.” This saying is 100% true. The zig-zagging nature of the stock market is the same as it always has been. In the long term, the market always finds a way to reach a new all-time high. As always this is not financial advice and history doesn't always repeat itself. I do believe one day this trend will break. However for now, based on the charts the uptrend is still intact. $SPX500 $NSDQ100

The S&P 500 (^GSPC) is on track for its best first quarter of a fiscal year since 2019. AI stocks and cooling inflation have fueled the rally. With looming interest rate cuts from the Federal Reserve, and an ongoing presidential election season, can the market continue to soar? WealthWise Financial CEO Loreen Gilbert joins Market Domination to discuss the performance of the S&P 500 and how the broader market may move going forward. Several factors could derail the market's persisting rally, Gilbert explains: "I think valuations are always a concern, and I think we've seen just in the last few days some concerns about technology and has there been over-exuberance in the area of AI, and has it kinda gotten ahead of itself? I think you have to be mindful of the prices that you're paying for stocks, because how much has already been embedded to those future earnings that are going to happen. So, definitely being mindful of the price, and that could derail certain areas or certain stocks." Click below to watch my full interview with Josh Lipton and Akiko Fujita on Yahoo Finance: https://lnkd.in/gh87ZqEW

The recent EPS revision shows a +38% increase for the five mega tech stocks, while the rest of the S&P 500 saw a 5% revision downward. Higher growth potential or profitability in these companies attract investor interest and money from all over the world. This result is intuitive. We are still in the foundational stages of the A.I. era. where hardware development precedes software applications, much like roads being paved before facilities are built. Even if an A.I. bubble eventually bursts, it doesn’t signal the end of the A.I. revolution. Technological advancements never stop and will continuously inspire excitement among users and investors alike. As the saying goes, “Bull markets are born on despair, grow on skepticism, mature on optimism, and die on euphoria.” It is crucial to seek evidence to understand the current market phase and the chart suggests that investors are cautious. We are in a robust bull market, even though the current market performance is driven by several stocks. Pullbacks may still happen but those should be seen as healthy corrections. Goldman Sachs analyst Jim Covello remarked, “One of the most important lessons I've learned over the past three decades is that bubbles can take a long time to burst.” Therefore, we might not be there yet. For some investors, the greatest risk this year might not be investing in A.I. giants too late, but rather leaving the party too early.

This week's market briefing discusses the S&P 500 surpassing 5,000 points due to US tech stocks' performance. It also covers the 'Magnificent Seven' tech giants' influence, US Federal Reserve Chair Jerome Powell's comments, upcoming inflation figures, and international market movements. Additionally, it touches on inheritance planning and emphasizes the importance of early financial discussions within families. #financialplanning #wealthmanagement

After a volatile year in the equity and bond markets, we’ve seen returns enter very positive territory in December. The Federal Reserve noted this month that it is unlikely to raise interest rates further this year and could possibly even cut rates next year. This resulted in understandably high investor sentiment.   Here’s another reason that the market has been soaring—a group of stocks called “The Magnificent Seven”: https://lnkd.in/geW5sj49   Don’t hesitate to reach out if you want to discuss things further: www.winterassoc.com. 

“Technology is such a huge factor cutting across industries that it will unleash productivity growth, which is deflationary in nature. Your labor costs go down, which is a driver of the service economy.” Our CIO, Sandip Bhagat, was featured in Philip van Doorn’s latest MarketWatch Weekender, providing his thoughts on the recent shifts in the S&P 500 and long-term investing. Read the full article here: https://lnkd.in/gV5NZCDg #WhittierTrust #TrustWhittier #WealthManagement #WhittierTrustInsights 

Market Outlook - January 2024 Let’s address the elephant in the room with these big mega-cap tech stocks that have been driving the S&P 500 performance over the past year and early into 2024. The meteoric rise for this handful of stocks begs the question of concentration risk and what happens to the “markets” if these stocks begin to wane. From our perspective these stocks certainly have an outsized influence, and could have an impact on a short-term basis, but digging deeper into the data we get a bigger picture, which illustrates longer-term performance trends are suggesting that market breadth has improved in recent months. Most notably since Nov’23, style and size indexes have all posted similar gains versus the large-cap and growth dominated trends we saw for most of last year. We believe the reindustrialization of North America has become more obvious over the past year and that the market is well supported in 2024. Many of the mega caps benefit from AI tech and they’re getting closer to monetizing this investment, but as often happens when the market latches on to a sexy theme it tends to discount that relatively quickly. In this case, looking at the mega caps (Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia) their market cap has gone up almost $5 trillion since Nov 2022, for a potential revenue opportunity a decade ahead of about a trillion. Is it really going to be that big or are we underestimating the market potential? Historically, these forecasts have been on the bullish side. The fact that the markets are broadening out and more stocks/sectors are participating in this rally is really encouraging. From our perspective, we still like the large info tech names, but some of them are overvalued and there’s opportunity in other sectors like REITS, utilities, renewable energy, rail, etc. It’s not that these stocks are better, but the risk reward is currently more attractive. To subscribe to our monthly market commentary, please email us at msbwealth@nbpcd.com #markets #marketoulook #MSBWealth #BMO #NesbittBurns

Market Outlook - January 2024 Let’s address the elephant in the room with these big mega-cap tech stocks that have been driving the S&P 500 performance over the past year and early into 2024. The meteoric rise for this handful of stocks begs the question of concentration risk and what happens to the “markets” if these stocks begin to wane. From our perspective these stocks certainly have an outsized influence, and could have an impact on a short-term basis, but digging deeper into the data we get a bigger picture, which illustrates longer-term performance trends are suggesting that market breadth has improved in recent months. Most notably since Nov’23, style and size indexes have all posted similar gains versus the large-cap and growth dominated trends we saw for most of last year. We believe the reindustrialization of North America has become more obvious over the past year and that the market is well supported in 2024. Many of the mega caps benefit from AI tech and they’re getting closer to monetizing this investment, but as often happens when the market latches on to a sexy theme it tends to discount that relatively quickly. In this case, looking at the mega caps (Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia) their market cap has gone up almost $5 trillion since Nov 2022, for a potential revenue opportunity a decade ahead of about a trillion. Is it really going to be that big or are we underestimating the market potential? Historically, these forecasts have been on the bullish side. The fact that the markets are broadening out and more stocks/sectors are participating in this rally is really encouraging. From our perspective, we still like the large info tech names, but some of them are overvalued and there’s opportunity in other sectors like REITS, utilities, renewable energy, rail, etc. It’s not that these stocks are better, but the risk reward is currently more attractive. To subscribe to our monthly market commentary, please email us at msbwealth@nbpcd.com #markets #marketoulook #MSBWealth #BMO #NesbittBurns

Year to date the market cap weighted S&P 500 (+11%) has outperformed the equal-weighted S&P 500 (+5%) by better than two-to-one driven by the out-performance of several large-cap tech stocks (especially NVDA +128% ytd). This magnitude of divergence is pretty unusual - the returns of the 2 indices track closely over longer timeframes. Divergences like this can apply psychological pressure to both retail and institutional investors & trigger behaviors from behavioral economics textbooks such as: LOSS AVERSION: Kahneman and Tversky found that losses can be be twice as powerful psychologically as gains. I think it's safe to assume the majority of active investors who don't own NVDA right now are underperforming - which in turn means they are likely feeling pretty crummy. FOMO: might actually impact institutional managers (who look at returns & attribution in short increments) more than retail investors. FOMO can lead to the desire to join the party even if it is 2 AM and the champagne is about to run out (I have no idea how much more champagne Jensen has btw.) 

In this week’s investment commentary, PM @Kyle Tripp discusses that while earnings growth for the Magnificent Seven are projected to fall, earnings growth for the rest of the S&P 500 Index is expected to rise. The upshot is we're not too concerned about earnings as we look at current high valuations.  #InvestmentCommentary #Markets