Why Nvidia, Broadcom and other high-flying stocks are especially risky now

Core Insights - October is not statistically more likely to experience market crashes compared to other months, with a 0.06% probability of a one-day crash as severe as the 1987 crash [3] - Despite the historical perception of October as a risky month, the actual data suggests that the month has below-average occurrences of bear markets starting [5] - Individual sectors that have significantly outperformed the market are at a higher risk of crashing, with probabilities increasing as the degree of outperformance rises [6] Market Crash Probability - The probability of a one-day crash in October is equivalent to that of any other month, indicating no special risk associated with this month [3][4] - The belief that October is more vulnerable to crashes is challenged by data showing fewer bear markets beginning in October since 1900 [5] Sector Vulnerability - Industries that outperform the market by large margins face elevated crash risks, with a 53% probability of crashing if they outperform by 100 percentage points over two years [6][7] - The crash probability increases to 76% when the outperformance reaches 125 percentage points and to 80% at 150 percentage points above the market [7]