The warning signs are flashing, but no one’s listening. The Nasdaq 100 keeps climbing, yet earnings per share (EPS) estimates are diving. That’s not normal. That’s a glaring disconnect. When price outruns profit reality, something’s got to give.
Meanwhile, the S&P 500’s CAPE ratio just hit 38—the second-highest in history, right behind the Dot-Com Bubble. We all know how that ended. Forward returns? Looking bleak, unless we get one last euphoric blow-off like late ‘99.
The latest Bank of America Fund Manager Survey paints a reckless picture:
— Cash holdings at 15-year lows.
— Recession fears at a 3-year low.
— A massive overweight in U.S. equities.
Translation? The crowd is ALL IN. And 89% of them admit the market is overvalued—the highest since April 2001. But somehow, only 16% expect a global recession. That’s a level of blind optimism that should make any rational investor nervous.
Oh, and if you think seasonality is on your side, think again. Historically, the first year of a presidency is decent for markets, except for the next two weeks in February. Watch your step.
Sources:
https://x.com/SpecialSitsNews/status/1891459944035098839
https://x.com/Barchart/status/1891730111658885303
https://x.com/DonMiami3/status/1891612651358195765
https://x.com/MikeZaccardi/status/1891802711756063168
https://x.com/lisaabramowicz1/status/1891790855557591230
https://x.com/WinfieldSmart/status/1891827770654614006