Happy Third Birthday to the Bull Market

Core Viewpoint - The current bull market, which began on October 14, 2022, has seen significant gains, but concerns arise regarding high valuations and market concentration, particularly in AI investments [1][2][4]. Market Performance - The bull market has lasted three years, with major indices gaining 60% (Dow), 85% (S&P 500), and 118% (NASDAQ) since the last bear market [1]. - Historically, bull markets average 2.7 years with a gain of 115%, while bear markets average a loss of 35% and typically last less than a year [2]. Historical Context - There have been 27 bull and bear markets since 1928, with the first half of bull markets outperforming the second half 74% of the time [4]. - The current bull market is compared to the dot-com bubble, but it is driven by established mega-cap companies rather than speculative startups [4][6]. AI Influence - The current market is significantly influenced by AI investments, drawing parallels to the dot-com bubble but with key differences in the types of companies involved [4][5][6]. - Major companies driving gains include those known as the "Magnificent Seven," which have strong earnings growth and revenue reliability [6]. Stock Analysis - Tesla (TSLA): Currently priced at $439.31 with a P/E ratio of 253.94. The stock is highly volatile, with a drop of nearly 54% from its all-time high to its year-to-date low, followed by a 93% recovery [11][12]. - NVIDIA (NVDA): Priced at $183.22 with a P/E ratio of 52.20. The stock has a beta of 2.12, indicating high volatility, and has shown a 36% drop from its all-time high, followed by a 93% increase [13][14][15]. - Palantir Technologies (PLTR): Priced at $178.15 with a P/E ratio of 593.85. It has the highest beta of the three stocks at 2.60 and has experienced significant price fluctuations this year [16][17]. Valuation Concerns - The forward P/E ratios for Tesla, NVIDIA, and Palantir are significantly higher than the S&P 500's forward P/E of 28, indicating potential overvaluation [17].