Sou Hu Cai Jing·2025-07-20 14:57Core Viewpoint - The current bullish trend in the US stock market is characterized by significant gains, with the S&P 500 reaching historical highs and the Nasdaq following suit, but there are concerns about potential downturns in September [1][4][12]. Current Market Situation - The S&P 500 has risen by 7% this year, recently hitting a new high, while the Nasdaq has seen even more dramatic increases driven by tech giants like Apple, Microsoft, and Nvidia [4]. - There is a stark contrast between institutional investors celebrating their gains and retail investors expressing confusion and fear about the sustainability of the market rally [4][6]. Reasons for Continued Optimism - Historical Performance: July has historically been the best month for the S&P 500 since 1928, while September has been the worst [6]. - Stock Buybacks: August is noted as a peak month for stock buybacks, which can drive up stock prices due to reduced supply [7][8]. - Low Earnings Threshold: Current earnings expectations are low, meaning companies only need to avoid significant losses to be seen as exceeding expectations [9]. - Low Volatility: The VIX index is currently low, indicating reduced market volatility, which encourages more investors to enter the market [10][11]. September Concerns - Historically, September has been a poor month for the S&P 500, with significant market downturns occurring in this month in the past [12]. - The potential decline in stock buybacks after the peak in August could lead to reduced support for stock prices [12]. Recommendations for Investors - Investors are advised to avoid chasing high-flying stocks, particularly those based solely on speculative trends [16]. - Caution is advised regarding companies that rely heavily on stock buybacks, especially if those funds are borrowed [16]. - Historical trends should be viewed as references rather than guarantees of future performance [14]. - Investors should be wary of following predictions from market experts, as their interests may not align with those of retail investors [15]. - It is recommended to use only disposable income for investments and to set stop-loss orders to mitigate potential losses [16]. Conclusion - The current market rally is primarily driven by excess liquidity rather than strong economic fundamentals, and investors should remain cautious as conditions can change rapidly [17].