Below are some of the most interesting things I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
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According to Bloomberg’s Gina Martin Adams, “The S&P 500 Index has outpaced our macro model-based fair value for a record stretch since 2022, as the dominance of the Magnificent Seven has unhooked the usual links between economic conditions and market pricing. The last time this historically reliable model missed by this much was during the tech bubble in 2000.”
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And with penny stock volumes hitting a record share of total trading activity (as reported by The Daily Chartbook reports), it’s hard to argue there’s not a great deal of speculative fervor at both ends of the market cap spectrum.
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That speculative fervor in the stock market may be most acute at companies buying up bitcoin. “Companies around the world are on a bitcoin buying spree, as executives — often in industries that have nothing to do with cryptocurrency — mimic a stockpiling strategy that has produced explosive share price growth,” reports the Financial Times.
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As the pink paper also points out, this trend opens door to a great deal of potential fraud and abuse. “The Institute of Chartered Accountants’ most recent update of crypto guidelines boils down to asking lots of questions of management and hoping they’re not good liars.”
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And, in the context of this boom in speculation, it’s not surprising to see everything else outside of its white hot center fall, “near-all-time lows in relative valuations,” as Research Affiliates points out. Perhaps it’s an opportune time to adopt a more fundamental approach to investing.
