#valuations

#valuations

When people get very excited, as they are today about artificial intelligence for example, is every experiment gets funded, every company gets funded, the good ideas and the bad ideas, Bezos said, pointing to companies getting billions of dollars of funding before they have a product. Investors have a hard time in the middle of this excitement distinguishing between the good ideas and the bad ideas.

The S&P 500 is wandering into uncharted territory as it looks to wander above the 6,500 mark going into the last four months of the year. It's never been so concentrated at the top, and with valuations on the rise (it may find itself closing in on a 30 times trailing price-to-earnings (P/E) multiple), some wonder if the SPDR S&P 500 ( NYSEARCA:SPY) is overdue for a correction.

In the last 100 years, the average gain among 14 bull markets has been 177% over 59 months. Based on that data, the S&P has more room to run, as stocks are "only" up about 80% since the October 2022 lows. Yes, but: Of course, this is a technical indicator, looking at past performance, which is not indicative of future results. This doesn't take into account some of the market risks we've covered, ranging from valuations to concentration to macro and policy risks.

The AI boom has created a record-breaking wave of new billionaires and high company valuations in the past year at a rate unprecedented in history.