• Current read is 32 on the fear greed index vs 25 last week.

• The market is within a few percent of ATH. I do not think we are in fear now. I put the number closer to 55 for the actual now.

• 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 increased to 6.46% Today, vs 6.35% last week.

• 10 year treasury bond yield increased to 4.48% Today, vs 4.37% last week

• 2 year treasury bond yield increased to 4.13% Today, vs 4.09% last week.

• Not much movement this week in bond yields or mortgage rates. They ticked up a little, but nothing that changes the bigger picture.

• As I always say, interest rates are gravity!

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

The Market Is Not Cheap, But It Is Not Crazy Either

What’s going on everybody!

This past week was not really a crazy week in the market, but I do think it was an important week because we are at one of those spots where people can easily start overthinking everything.

The market pulled back a little bit. Nothing insane. Nothing that makes me panic. Nothing that makes me think the whole system is breaking. Just normal volatility.

And that is really the biggest point I want to make right away.
Volatility is not the problem.

The problem is people owning the wrong stuff, at the wrong price, with the wrong time frame, and then freaking out when the market does exactly what the market always does.

Stocks go up. Stocks go down. Good companies can drop. Bad companies can rip. Expensive stocks can get more expensive. Cheap stocks can get cheaper. That is just how this game works in the short term.

The market will usually not be rational in the short term… that’s why it’s so hard to predict short term moves… because there is a huge randomness factor that is just impossible to bet on. (no surprise the billionaire investors almost all think long term)

Right now, the market is not screaming cheap. But I also do not think the market is wildly overpriced like some people are acting.

The S&P 500 forward PE is around 20.4 right now. The 5 year average is around 20 and the 10 year average is around 19. So yes, we are paying a little bit more than the longer term average.

But here is the part people miss.
Q2 earnings growth is expected to be around 23.3% year over year.
That is very strong!

The average earnings growth rate is closer to 10%. So when people only look at the PE ratio and say, “The market is expensive,” they are missing the other side of the equation.

If earnings are growing more than 2 times faster than normal, then the market can support a higher multiple than normal.

That does not mean stocks have to go straight up. It does not mean you should just go buy random calls. It does not mean everything is cheap.

It just means the market is probably somewhere around fair value, maybe slightly overvalued in that 0% to 5% range.
That is basically how I am thinking about it.

Not crazy cheap. Not crazy expensive. Somewhere in the middle. And when the market is in the middle, you need to be selective.

A good stock can be a bad investment if you pay too much for it.
A boring stock can be a great investment if the price is right.
And a hyped up stock can crush people if the expectations are already way too high.

That is why I keep talking about owning the cream of the crop and being patient. Great companies. Strong earnings. Real moats. Good balance sheets. Good management. Good pricing power. And most importantly, reasonable prices.

On the other side (the side too many ppl focus on), there are stocks that I still think are way too expensive.

Walmart is a good example. Great company, but the valuation is still too high for the amount of growth you are getting. That is the type of setup where people say, “Well I will just buy the shares and sell covered calls.”

Okay, fine.

But if the stock itself is overvalued and the shares keep grinding lower, the covered call premium might not save you. You can still lose money. And even if you do not lose money, you might have a ton of opportunity cost sitting in something that was never that compelling to begin with.

That is one of the reasons I am not a huge fan of covered calls as a core strategy.

Same thing with a lot of these hype names. Sometimes they work. Sometimes people make money. I am happy for them when they do.

But I always think about the casino analogy.
In a casino, there is the house and there is the player.

The player can win. The player can go on a hot streak. The player can walk in and make money.

But the longer the player stays at the table, the more the odds usually start to show up.

I do not want to be the player.
I want to be the house.

I want the odds stacked in my favor as much as possible on every single trade and every single investment. That does not mean I will always be right. Nobody is always right. But I want to structure things in a way where I am not depending on luck, hype, or perfect timing.

That is why I keep coming back to long term investing, good companies, fair prices, and patience.

I know it sounds boring.
But boring is usually where the real money is made.

Everybody wants the exciting trade. Everybody wants the 1 month call option that turns into a 10x lottery ticket. Everybody wants to catch the stock right before it goes to Pluto.

But most people do not get rich that way. Most people just keep resetting themselves because they get a little confidence in a bull market, start taking bigger risks, and then get crushed when the market finally reminds them that risk is real.

Bear markets will come.

Nobody knows when. Nobody knows what causes the next one. Nobody knows how deep it will be.

So the goal is not to predict every little wiggle in the market.

The goal is to have a system that works when the market goes up and does not destroy you when the market goes down.

That is what I am always trying to do.

Right now, I am still medium bullish. Not max bullish. Not bearish. Just medium bullish.

The economy is still holding up. Earnings growth is still strong. Interest rates are not doing anything crazy. The market is around fair value. And if we do get more volatility, I think that volatility can become opportunity if you are focused on the right companies.

Q2 earnings are about to start, and that is going to be the next big thing I am watching.

The banks usually kick things off. Then we get into names like TSM, Netflix, ASML, Microsoft, Meta, and a lot of the big dogs. That is when we will start to see if the earnings story is still intact.

If earnings keep coming in strong and guidance holds up, I think the market can continue working higher over the next couple years. Not in a straight line. Not without pain. Not without scary pullbacks.

But higher over time.

If earnings start slowing faster than expected, then we adjust.

That is why I track this stuff every day inside Discord. Not because every data point matters, but because the trend matters. Earnings matter. Valuation matters. Rates matter. The economy matters.

And when you combine all of that, you can make much better decisions than just guessing based on a chart.

The big picture is simple.
I think the next couple years can still be very good for investors, but I do not think it is going to be easy. I think there will be plenty of volatility. I think people chasing the wrong stocks are going to get hurt. I think people buying overvalued companies just because they are popular are going to learn a hard lesson.

But I also think people who stay patient, focus on earnings, buy great companies at reasonable prices, and stop trying to predict every short term move are going to do very well.

That is where I am at.

I am trying to make the most amount of money in the most realistic way while being able to survive the ugly parts of the market & have a total ROI that beats it at the end of the day.

And yes, it is boring.
But investing is supposed to be boring.

It is like watching grass grow. You can stare at it, talk to it, play music for it, or worry about every little breeze, but it is not going to grow faster because you are emotional about it.

Buy good grass when it is undervalued. Let it grow. Let the storms come and go. And stop digging it up every 5 minutes to see if it is working. (corny analogy but you get it)

That is how I am thinking about this market right now.

That’s my thoughts for this week.
See you next week!

-Brandon

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Economic/Earnings Calendar For July 6 - July 10
(all times in pst)

Monday July 6:
6:45a ISM Services PMI

Tuesday July 7:
5:30a U.S. Trade Balance

Wednesday July 8:
7a Wholesale Inventories
11a Minutes for June FOMC Meeting
12p Consumer Credit

Thursday July 9:
5:30a Initial Jobless Claims
7a Existing Home Sales

Friday July 10:
Delta Airlines Earnings (premarket)

Everything will be broken down in real time in Discord!