In a pivotal moment for the market, the S&P 7, responsible for 95% of the S&P 500’s gains this year, is facing scrutiny due to its overvaluation. With a price-to-earnings ratio reminiscent of historic bubbles, including the tech boom of 2000, concerns grow as some S&P 7 components exhibit P/E ratios over double previous bubble levels, notably Nvidia at 115x. The question looms: Can these few stocks continue to bear the weight of the entire market, or is a correction inevitable?
"Investors buying the S&P500 today are buying seven companies that are already up 80% this year and have an average P/E ratio above 50."
– Apollo Slok pic.twitter.com/6YBQZF537L
— Daily Chartbook (@dailychartbook) November 27, 2023
Dude pic.twitter.com/aQ266vb55w
— zerohedge (@zerohedge) November 28, 2023
On a price-to-earnings basis, the S&P 7 is now as overvalued as tech in 2000 and the Nifty Fifty in 1972.
These are the same stocks that have accounted for 95% of the S&P 500's gain this year.
The P/E ratio on some components of the S&P 7 is now more than DOUBLE the levels seen… pic.twitter.com/C1P6A2fP9c
— The Kobeissi Letter (@KobeissiLetter) November 28, 2023
7 stocks vs everything else update pic.twitter.com/5lIiWiGkgg
— zerohedge (@zerohedge) November 27, 2023