In this week's Stansberry Investor Hour, Dan and Corey welcome Alan Gula back to the show. Alan is an editor and member of the Investment Committee for The Total Portfolio and Stansberry's Forever Portfolio, as well as a senior analyst for Stansberry Research's flagship newsletter, Stansberry's Investment Advisory.

Alan kicks things off by sharing three concerns he has for the current market rally. He looks at the market's credit spreads, as he uses that as a sentiment indicator for the broader market. Then he gives an in-depth examination of the high bids of stocks by looking at the high beta (the measure of market risk) relative to the S&P 500 Index...

I'm sort of worried that the high bid of stocks [has] really dominated so much during this recent rally... There's obviously a lot of tech right now. There are some cyclicals, consumer discretionary, there's cruise lines and airlines, some financials and Robinhood and Interactive Brokers, Goldman, Morgan Stanley... The chart shows me that the bull market the last nine months has been driven by high bidder stocks, and that's not necessarily a good or bad thing. I just think it increases the risk for the overall market.

Next, Alan discusses gold's history during secular bull markets, highlighting how the precious metal has had impressive spikes but serious drawdowns along the way. As such, he states that investors should be cautious during the current bull run and trim any risk. He then reflects upon The Total Portfolio outperforming its benchmark and the framework that contributed to its success. And he gives his take on "whether AI is in a bubble or not"...

There [are] high-conviction takes on it. "Yes, it's a bubble." And "No, it's not a bubble." Well, I'll say this. I update this free-cash-flow yield valuation model for the S&P 500 each month. And we started this several years ago. And it's just a great way to track the overall valuation of the market... Way back when I created that chart initially, we put these levels on it. So there's an average free-cash-flow yield, and I said, "OK, here's there's a band for average. And then cheap, dirt cheap, there's expensive. And then bubble"... The bubble-like band, we're almost at it. And so, just based on that, we are on the cusp, I think just based on free-cash-flow yield for the S&P 500. Yeah. We're on the cusp of a bubble... [But] I think the term bubble, it just gets overused.

Finally, Alan expresses why you shouldn't focus so much on previous earnings over the long term for rapidly growing companies. Instead, he says it's better to examine their free-cash-flow yields. He also warns investors to be mindful of what to invest in to protect themselves during a bear market. Companies that provide opportunities during bull markets might be poor performers during drawdowns, so it's wise to plan accordingly when diversifying your portfolio. He illustrates this with one sector...

You just have to be careful what's going to protect you in a bear market... If you're looking at unloved sectors, staples was... 12% of the aggregate S&P 500 market cap [in the early '90s]. And during the tech bubble, that fell to like below 6%. And then staples came back. And that's a function of staples being unloved but also tech... But then staples grew, too, and at the end of the financial crisis, staples were back to like 12% to 14% of the overall market. And now they're back down to less than 6%.

Click on the image below to watch the video interview with Alan right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

Alan Gula is an editor and member of the Investment Committee for The Total Portfolio and Stansberry's Forever Portfolio, as well as a senior analyst for Stansberry Research's flagship newsletter, Stansberry's Investment Advisory. After graduating from Villanova University, Alan joined Goldman Sachs as a financial-database expert in the Investment Banking division. While there, he witnessed a merger-and-acquisition boom. Later, at Barclays Investment Bank, he had a front-row seat to the financial crisis on various trading desks. Alan was also a statistical arbitrage trader at an independent proprietary trading firm. He joined Stansberry Research in 2016.

Alan has been a CFA charterholder since 2011. He also has a Master of Business Administration with a specialization in quantitative finance from the Stern School of Business at New York University.