US Stocks Near All Time Highs/ What's Next?

Summary

In this video, the speaker provides insights on stock market trends, stock valuation, and economic factors affecting investments. They emphasize the importance of understanding intrinsic value when evaluating stocks like Apple, Booking.com, and Palantir. The speaker discusses the current market uptrend, highlighting key factors like tariff resolution, Trump's deregulation and tax policies, and potential interest rate cuts by the Fed. Despite concerns over war, the speaker points out that historical evidence shows markets often thrive during conflicts, encouraging optimism for long-term investment success.

Takeaways

• 😀 The market is in an uptrend, with prices expected to continue rising in the near future, driven by positive trends and fundamentals.
• 😀 Apple's stock is slightly above its intrinsic value, but it is considered fairly priced within a 10% margin; the speaker plans to buy only if it drops below its intrinsic value.
• 😀 Many stocks, including those held by the speaker (e.g., Booking.com and Palantir), are overvalued, but the speaker intends to hold them long-term as they believe these companies will grow into their valuations.
• 😀 The speaker believes the market could continue rising in the second half of the year, driven by positive policies like deregulation and tax cuts from the Trump administration.
• 😀 The Federal Reserve is expected to cut interest rates two to three times by the end of the year, which could further boost the market.
• 😀 Recent inflation data shows softer-than-expected results, supporting the likelihood of interest rate cuts and continued market growth.
• 😀 Despite fears of the war in Iran, oil prices have failed to break the long-term downtrend, which is positive for controlling inflation.
• 😀 Wars do not necessarily derail stock markets; historically, wars have sometimes been positive for stocks, as seen in the U.S. during World War II.
• 😀 Both Israel and Iran's stock markets are at all-time highs, demonstrating that markets can thrive even during periods of conflict.
• 😀 The speaker emphasizes the importance of staying invested for the long term to maximize returns, as long-term growth is the key to making significant profits.

Q & A

Why does the speaker believe it is important to buy stocks only below their intrinsic value?

The speaker suggests that buying stocks below their intrinsic value offers an opportunity for greater returns, as the market will eventually correct the stock’s valuation. This strategy aims to maximize profits by purchasing undervalued stocks.

What is the speaker's perspective on holding overvalued stocks like Booking.com and Palantir?

The speaker acknowledges that these stocks are overvalued but chooses to hold them because they believe these companies will continue to grow, eventually justifying their high valuations. The focus is on long-term growth rather than short-term price movements.

What does the speaker mean by the market being in an 'uptrend'?

An 'uptrend' refers to a general increase in the stock market or individual stock prices. The speaker notes that the market is currently on an upward trajectory, and based on the trend, prices should continue to rise.

How have tariffs impacted the market in the first half of the year, according to the speaker?

In the first half of the year, tariffs caused a lot of bearish sentiment in the market, as investors feared negative economic impacts. However, the speaker believes that with more certainty around tariffs now, market sentiment has improved.

What role do deregulation and tax cuts play in the speaker’s bullish outlook for the market?

Deregulation and tax cuts are seen as positive for stocks, as they reduce corporate costs and increase profitability. The speaker believes these policies will continue to drive market growth, even in the second half of the year.

Why is the Federal Reserve's potential interest rate cut important for the market?

The Federal Reserve cutting interest rates would make borrowing cheaper, encourage spending and investment, and potentially stimulate economic growth. This would likely have a positive impact on the stock market by boosting liquidity and lowering borrowing costs for businesses.

What is the 'CME FedWatch Tool' and why is it significant in this context?

The CME FedWatch Tool tracks market expectations of Federal Reserve interest rate moves. The speaker refers to it to highlight a 90% probability of interest rate cuts in September, which is seen as supportive for the market.

How have oil prices influenced inflation, according to the speaker?

Oil prices have been a major concern for inflation. However, despite initial fears that oil prices might rise due to geopolitical tensions, they remained in a long-term downtrend, which has helped keep inflation lower.

What does the speaker say about the relationship between wars and stock market performance?

The speaker argues that wars are not necessarily bad for stock markets. Historical examples, such as the U.S. stock market during World War II, show that markets can rise even during wartime. In fact, some markets, like Israel’s and Iran’s, are at all-time highs despite regional conflicts.

What is the speaker’s overall recommendation for investors based on the current market conditions?

The speaker advises staying optimistic and invested in the market. They emphasize that over the long term, remaining invested in the stock market is a proven way to build wealth, even if there are short-term challenges or uncertainties.