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DJIA: 45,752
On the way to Bubbleville … fundamentals got in the way? Suddenly, the premise of Hyper-scalers have become Hyper-spenders, and a source of concern. Like prophets in their own town, bubble peaks are rarely recognized, and certainly not on a fundamental basis. Bubbles are a phenomenon of supply and demand. They will tell you Nvidia (NVDA – 181) is cheap, which does have some meaning. Then, too, is that a good thing – does the market know something we don’t? More importantly is supply and demand – who is left to buy? Don’t mistake fundamentals, cheap or not, with a bull market. Even more important is the market’s trend. Fundamentals do not kill bull markets. Worry more about the average stock.
Thursday’s reversal was a surprise, so too is the recent strength in Pharma/Healthcare. To tout our profession, it’s about demand versus supply as much as anything. So, how much Pharma/Healthcare do you own, especially versus what you own in AI? And, of course, how much Colgate (CL – 79) or Procter & Gamble (PG – 148) do you own? Back in 2000, Philip Morris (PM – 156) and cigarettes didn’t become cool; they rallied because the selling was done. Done because everyone wanted the New Economy dot-coms. Always hard to see it when you’re in it, but markets always are about supply and demand.
Frank D. Gretz
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