• Current read is 60 on the fear greed index vs 59 last week.

• Market is still greedy which means to be cautious! We just caught a HUGE move & you need to ensure ratios are in check & prepared for volatility (as always)

• Market Fearful = Potential Opportunity/Deals. (consider buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (consider buy puts/sell shares/take on less risk)

• I like to be bullish when there is extreme fear

• I like to be bearish when extreme greed.

• Opportunity is out there, just gotta find it!

• 30 year fixed mortgage rate fell to 6.35% Today, vs 6.57% last week.

• 10 year treasury bond yield fell to 4.43% Today, vs 4.55% last week

• 2 year treasury bond yield fell to 4.00% Today, vs 4.12% last week.

• Interest rates fell a little this week on the back of an Iran deal potentially happening which will help with our prices & inflation.

• As I always say, interest rates are gravity!

• As interest rates/bond yields DECREASE, stocks become MORE attractive because bond yields go DOWN which makes the risk free bond look LESS attractive.

Hope everyone had a great week!
Here is this week’s newsletter!

Weekly Market Recap

This week was honestly pretty quiet on balance, but there are still a few important things going on under the surface.

We are basically winding down Q1 earnings season, and in a few weeks we are going to roll right into Q2 earnings. Earnings have been VERY strong YoY for the SP500 coming in over 28% YoY which is honestly insane. The average is about 8 to 10% in the long run.

Because of this, the market has had a strong move back up, but it is not exactly cheap anymore. Based on what I am seeing, the S&P 500 & Nasdaq is roughly 10% overvalued.

That does not mean the market has to crash.
It just means the margin of safety is lower right now.

That is why I am not forcing trades. I know everyone wants action. I know people want to see new trades all the time. But more trades does not mean more money. Sometimes the best move is literally letting the current positions keep working and not chasing whatever stock is going to Pluto this week.

The biggest thing supporting this market is still earnings growth. FactSet showed that 97% of the S&P 500 has reported so far, and the blended year over year EPS growth rate is 28.6%. That is extremely strong. So when people say the market is a giant bubble, I do not fully agree with that. I think the market is a little expensive, but the earnings growth is also really strong, so some of the move is justified.

The forward P/E ratio for the S&P 500 is around 21.2 right now. The 5 year average is around 20, and the 10 year average is around 19. So yes, we are above average, but we are not in some crazy 1999 style valuation yet.

If earnings keep growing, the market can grow into this valuation. If the market goes sideways for a few months while EPS keeps climbing, things start to look a lot more reasonable.

But if earnings slow down while valuations are already a little hot, then the market can correct fast.

That is why I am long term bullish, but short term cautiously optimistic.

Oil is also something I am watching closely. Oil has come down pretty hard from the highs, and if oil keeps falling, inflation expectations could come down with it. If inflation expectations come down, bond yields could also fall, and that helps justify higher stock market valuations. We are already seeing bond yields pull back a little.

That is the positive side of the story.

The cautious side is that markets do not go straight up forever. They never have and they never will. The market is going to get volatile again. It is going to pull back again. It is going to crash again at some point. I have no clue when, but anyone acting like volatility is gone forever is just getting caught up in the same herd mentality that crushes people every cycle.

This is why ratios matter.

Right now, I am still allocated. I still own the things I want to own. I am still bullish long term. But I am not trying to max out bullish exposure when the market is already above fair value. I would rather keep the portfolio in a position where if the market goes up, I beat the market, but if the market falls, I have the flexibility to capitalize.

That is the whole game.

Not chasing.
Not panicking.
Not needing 60 trades a day.

Just buying good things for less than what they are worth & using options to magnify ultra high confidence plays.

A lot of people on X, YouTube, TikTok, and Instagram look like geniuses right now because a bunch of high beta stocks have been ripping. Maybe they are good investors, maybe they are not. But making money in one market environment does not prove much. A lot of people have only experienced a market that rips to the moon.

The real test is what happens when the market punches you in the face.

That is why I care more about the full cycle of investing through bull markets and bear markets. I want to do well in bull markets and survive/capitalize in bear markets. I want to compound for years & decades, not just look smart for 3 months because one stock went vertical.

Looking ahead to next week, the biggest thing is going to be labor market data. We get job openings, ADP employment, services PMI, ISM services, and then the jobs report on Friday. Those matter because the labor market feeds into the Fed, interest rates, inflation expectations, and ultimately valuation levels.

On the earnings side, we have a few important names coming up like Palo Alto Networks, Broadcom, and CrowdStrike. After that, earnings will slow down a little before the next season starts ramping back up.

So my overall view is pretty simple.
The market is not terrible.
The market is not a screaming buy.
Earnings growth is very strong.
Valuations are a little hot.
Long term, I am bullish.
Short term, I am cautiously optimistic.

This is exactly the type of environment where you do not want to get emotional. You do not want to chase because everyone else is chasing. You do not want to force trades because you are bored. You want to know what you own, why you own it, what it is worth, and how much risk you are actually taking.

The market does not care about me, you, Warren Buffett, or anyone else. In the short term, it is a voting machine. In the long term, it follows profits.

Right now, profits are growing fast, but price has moved fast too. So we just have to keep our pants on, keep ratios in check, and be ready for whatever the market gives us next.

Volatility will come.

Opportunities will come.

The goal is to be ready when they do.

As always, I am rooting for you and want nothing but health & wealth for you and your family!

-Brandon

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Economic/Earnings Calendar For June 1 - 5:
(all times in pst)

Monday June 1:
GPU tech conference all week
7a ISM manufacturing data

Tuesday June 2:
7a Job Openings
Palo Alto Networks Earnings (post market)

Wednesday June 3:
5:15a ADP Jobs report
7a ISM Services data
Broadcom Earnings (post market)
Crowdstrike Earnings (post market)

Thursday June 4:
5:30a Initial/continued jobless claims
5:30a Productivity report

Friday June. 5:
5:30a Jobs Report

Everything will be broken down in real time in Discord!