The argument for stocks being in a bubble – and why I reject it

On Tuesday, I presented at the annual Stansberry Conference & Alliance Meeting in Las Vegas.

As I covered in yesterday's e-mail, I first reviewed my advice and stock picks from the past three conferences.

Today, I'd like to go over the next part of my presentation, where I shared my thoughts on the current market and my macro outlook.

I started by addressing the question, "Are stocks in a bubble?"

To find the answer, I shared six charts from various sources on valuation...

The first shows that the S&P 500 Index is trading at close to an all-time high based on its price-to-peak-earnings ratio:

The second shows that the S&P 500 is at an all-time high based on its price-to-sales ratio, more than double its historical median:

The third shows that the S&P 500's dividend yield is close to an all-time low:

The fourth shows that the U.S. stock market value relative to our GDP, the so-called "Buffett Indicator," is at an all-time high:

The fifth, going back more than 130 years, shows that an average of seven valuation metrics is at a high today that has only been reached once before, in 1929:

Lastly, the sixth chart looks at price-to-next-12-month-earnings ratios for five indexes. It shows that two – the S&P 500 and the Nasdaq 100 Index – are at all-time highs, and the other three are above their 20-year medians:

So, by almost every measure, valuations are high – especially among tech and large-cap stocks.

It's true that there are pockets of foolishness in the market right now (the latest example: Beyond Meat (BYND) spiking more than 600% in the past week).

However, I don't think we're in bubble territory – especially in light of how resilient the U.S. economy has been.

For instance, among the 10 largest U.S. companies, I'm only bearish on one of them: Tesla (TSLA).

(That said, I still think you're better off just avoiding the stock than selling it short... As I've said time and time again, shorting stocks is too dangerous.)

I think investors should be comfortable holding six of the top 10: Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), Broadcom (AVGO), Berkshire Hathaway (BRK-B), and Walmart (WMT).

And the remaining three – Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META) – still look like good stocks to buy, as I've discussed in many of my e-mails over the past several years.

In tomorrow's e-mail, I'll analyze the current state of the economy, so stay tuned!

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.