Source: Wall Street See News Author: Bu Shuqing.
Bearish analysts have repeatedly misjudged the market and lost their jobs. Some institutions have even abandoned the traditional practice of setting target prices for large caps. The rising price of Mag 7 has pushed the S&P 500's P/E ratio to 26 times, higher than any election year since at least 1990.
Despite the slump in Nvidia stock prices, the volatility in the Bitcoin market, and the political uncertainty caused by Biden's debate defeat, the S&P 500 index still maintains an upward momentum. On product structure, the operating income of 10-30 billion yuan products are 401/1288/60 million yuan respectively, with a year-on-year increase of 28.10%.
Under the leadership of giant technology stocks, the S&P 500 index has achieved a weekly increase of 2%, the best performance since April. This week, except for Nvidia, other growth techs rose, and Google, Apple, Microsoft, and Meta all hit record highs.
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"The Fed is still the main factor, and the market believes that it will eventually cut interest rates," said Mark Freeman, Chief Investment Officer of Socorro Asset Management, adding that no matter who wins the election, there will be no significant change in fiscal policy.
Bearish analysts lost their jobs, and some institutions even gave up target prices.
Despite facing multiple uncertain factors, the US stock market still maintains a strong upward trend, not only damaging bearish morale, but also increasing the difficulty of analysts in determining the market.
Speaking of which, it is necessary to mention the departure of Marko Kolanovic, chief market strategist at JPMorgan.
Kolanovic is known for his continued bearishness on US stocks, but has completely misjudged the market trend over the past two-plus years:
In January 2022, when US stocks reached their peak, he boldly recommended that investors substantially increase their holdings of US stocks. As a result, the S&P 500 fell from January to October, down nearly 20%.
In late September 2022, Kolanovic turned bearish on US stocks and recommended that clients reduce their positions in US stocks. As a result, the S&P 500 started to rise from its October lows and has been rising ever since, with a cumulative increase of over 50%.
This operation can be called a textbook-grade "reverse indicator", which also led to Kolanovic losing his job at JPMorgan.
Moreover, some institutions even gave up the practice of giving target prices for the S&P 500 index.
Researchers at Piper Sandler & Co. said that due to the index being overly concentrated in a few stocks, traditional forecasting methods have lost their meaning.
Mag 7 is getting more and more expensive, causing the large cap to become increasingly expensive.
"This year, the performance of the US stock market is clearly dichotomous: the prices of the "Seven Giants" continue to rise, while other stocks are relatively flat," said Jeff Muhlenkamp, whose eponymous funds have outperformed 97% of peers over the past three years.
Given the high valuations of these market-leading stocks, it is difficult to believe that this trend can continue. However, so far, this trend has indeed continued.
As backed by artificial intelligence, the giant technology stocks provide a strong growth narrative, attracting investors to enter the market continuously. Nvidia's stock price reaching new highs and claiming the top spot in the global market cap vividly illustrates what "the more expensive, the more love" means.
However, the stock market being concentrated in a few stocks is not a positive signal.
Trading at a P/E ratio of 26 times, the S&P 500 index's valuation level is higher than in any election year since at least 1990.
Trading at a 26x PE ratio, the S&P 500 index's valuation is higher than in any election year since at least 1990.
Of course, it's not just because of the current overvaluation that predicts an immediate stock market crash, but this overvalued state may well mean that the stock market's returns over the next period of time (especially after the election) may be lower than in the past.
Dan Suzuki, Deputy Chief Investment Officer at Richard Bernstein Advisors, said:
Today's high valuations for US technology giants may mean poor performance over the next decade, as they dominate the market and overall returns for the US market may be quite flat.
The sharp fall in the bitcoin market is another notable event this week.
Despite Trump's obvious easing attitude towards cryptos and his rising support rate, Bitcoin still suffered a heavy blow.
This once again illustrates the rising uncertainty of the macro-political impact on the market.
Editor/Lambor