The Great Mattsby
Chartist, Gann Theory, Stocks/Crypto/FX
Holding broad US stocks compounds returns; crash selling and overtrading destroy that advantage. Most would be dramatically richer holding quality stocks or the market for life. The S&P 500 has compounded roughly 10% a year with dividends reinvested; DALBAR's studies show investors lag by 1-3 percentage points or more annually from behavior. Random stock buy-and-hold usually fails: durable quality or broad diversification captures the few firms creating almost all wealth. x.comÂ
US stocks are supported by a liquidity cycle that can easily last until the end of Trump's term, and Kevin Warsh as Fed chair adds to it. Warsh sees AI driving a 1990s-style productivity boom that allows strong growth and lower neutral rates without inflation, pairing balance-sheet discipline with policy supportive of risk assets. Rates should hold at 3.50-3.75%, with a likely positive tone. Per @matthughes13, the Russell 2000 is breaking above 2,936, next resistance 3,569. x.com x.com x.comÂ
Improving breadth and GPUs massively outrunning depreciation costs put US-equity risk/reward heavily in bulls' favour. Some 59% of S&P 500 stocks are above their 50-day average; the Nasdaq 100 is positive over five trading days, and small caps bounced off their 200-day average. Buy gradually, as the selloff may not be completely over. x.comÂ
A disciplined S&P 500 core helps investors avoid panic selling and capture long-term compounding. The index has historically averaged about 10% annually; allocate 30%-60% of investable funds to a broad index fund, invest regularly and double purchases if the S&P 500 falls 10% from its high. Keep the rest for deeply researched growth leaders. x.comÂ
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.comÂ
Strong corporate profit margins may make the S&P 500 better value than traditional P/E ratios suggest, despite elevated stock prices. Per Bloomberg, its P/E-to-profitability ratio is at its lowest in nearly 14 years, last seen around 2012. Wall Street might be overlooking something important. x.comÂ
Post-midterm market strength calls for patience with US large-cap equities. KHerriage's quoted post cites an average S&P 500 gain of 29.9% over the next 15 months in post-midterm periods since 1950, with gains in 19 of 19 years. x.comÂ
The S&P 500's top 30 stocks cost three times as much per dollar of free cash flow as the other 470, despite their stronger margins. Their net margins are 34% versus 17%, but they trade at 5.6x sales and a 1% free-cash-flow yield excluding stock compensation, against 2.3x and 3% for the rest. Half of an index-fund investment rides on those 30 stocks at the richest multiples in modern history. x.comÂ
Strong corporate earnings make weekend crash panic a contrarian buying opportunity in US large-cap equities. Most individual stocks have already gone through bear markets despite the S&P 500 nearing record highs; weekend social-media panic rarely leads to a genuine economic downturn and instead offers long-term investors an attractive entry point. x.comÂ
US equities tend to perform well after October in midterm years, making the historical pattern hard to ignore. Since 1950, the S&P 500 rose in 19 of 19 observed 12-month periods after October, averaging 16.6% with a 3.0% worst return. October and November also averaged gains, but history is not a promise. x.comÂ
The S&P 500 rally is a concentration bet because earnings growth is coming from very few companies, while AI productivity gains are not spreading across the broader economy. Nvidia and Micron drive 34% of expected Q3 earnings growth, and ten companies account for two-thirds. Apollo's revenue-per-worker chart shows gains for the Magnificent Seven but little for the other 493 S&P 500 companies; most stocks that reflect the broader economy are down. x.com x.com x.comÂ
The S&P 500's post-midterm record makes 2027 pullbacks worth buying, though history does not guarantee another gain. It rose in the year after all 19 US midterm elections since 1950, averaging 15.4% over 12 months, 12.4% in six months and 5.7% in three months. Take advantage of market swings by buying pullbacks. x.com x.comÂ
