Kailash Concepts
Behavioral Finance Research, Portfolio Strategy & Quantamental Tools
Big Tech is priced on extrapolation bias, the same error made at every bubble peak, as bulls project explosive past earnings forward. Per Kailash Concepts, the 10 largest tech stocks trade at 50 times free cash flow with a 1.5 beta and a 1% total yield, while the 10 largest energy stocks trade at a 4% free cash flow yield, 24 times earnings and near-zero beta, a historic valuation gap hiding in plain sight. x.com
US large-cap equities do not look like a bubble at current forward valuations. The S&P 500 forward P/E is below both its five- and ten-year averages, while tech and momentum have suffered their worst five-month decline by far. x.com
US technology shares are way overvalued for realistic growth expectations. Their decline is a repricing toward more reasonable expectations, not the Black Monday-style crash some over-leveraged tech holders predict. x.com x.com
Rising S&P earnings revisions and a Nasdaq valuation far below the 2000 bubble level argue against a bull trap in US large caps. Nasdaq trades at 18x forward earnings versus over 80x in 2000. Positive breadth divergences, record short ETF exposure and put volume, and semiconductors waking up add to the case. In all 19 post-midterm instances cited, markets were very green over the following 12 months. x.com x.com
US large-cap equities are vulnerable because earnings have not caught up with total market capitalization. The market is farther from its 200-week moving average than at any point in 18 years, and cracks are starting to show; staying bullish ignores these risks. Rate hikes remain possible, oil is still high, and yields may climb again, so now is the time for caution. x.com x.com
Apple's roughly 35x forward earnings premium looks unsustainable. If fear around the AI trade fades, its gains could stall or reverse. x.com x.com
Tech stocks should recover to near all-time highs at or after earnings season, since they trade at historically low valuations of 16-22x forward earnings despite strong growth. Value stocks' fundamentals have weakened significantly from already expensive levels. Markets are pricing the worst-case war scenario, but both sides are negotiating and the US holds the cards. x.com
The Nasdaq 100 looks frothy as tech supply floods in after a historic run. Per Kobeissi Letter, US tech rose 42% in two months, its biggest two-month gain in 24 years, led by a 66% jump in semiconductors. Megacaps are doing $80B secondaries and IPOs may add over $4 trillion of new tech equity. Google judging stock at a 2.5% earnings yield cheaper than 30-year bonds at 5.5-6.0% says equities are expensive. Exiting the dot-com bubble two years early still beat staying two years too long. x.com … Show more
The S&P 500's elevated P/E masks concentration in just a few stocks, making index exposure less appealing than selective stock picking for risk and reward. Its P/E is well above the ten-year median; digging into individual constituents looks more sensible than buying all 500. x.com
US stocks are getting cheaper even as they rise, because earnings are booming and P/E multiples are declining, making this the opposite of a bubble. x.com
Low forward earnings multiples across eleven stocks cannot persist indefinitely. Nvidia trades near 17.5x, its lowest in over a decade; Oracle near 15x, its lowest in six years. Uber is at 17x, Broadcom 19x, Vistra 15x, AppLovin 14.5x, TSMC 19x, Forgent Power Solutions 18x, Nokia 19.5x, American Express 17x and Western Digital 14x. x.com x.com x.com x.com x.com x.com x.com x.com x.com x.com x.com
