Why Stocks Are Still CHEAP (Even Near All-Time Highs)

Labor Market Analysis - The labor market deterioration is attributed to a combination of factors: the launch of Chat GPT in November 2022, the Federal Reserve raising interest rates around March of that year, and a retrenchment from the pandemic hiring boom [3][4][5] - Companies are shifting from pure growth to efficiency, aiming to grow revenue and profits with the same or fewer employees, with AI playing a significant role [7][8] - Job growth is decelerating but normalizing to pre-pandemic (2018-2019) levels, with AI potentially causing further slowdowns due to anticipated productivity increases [8][9] Market Sentiment and Valuation - There's peak "bubble fear talk" in the market, potentially influencing asset prices, but enthusiasm and anxiety are also peaking [10][11] - Current market frothiness, as indicated by Google search trends, is approaching pandemic levels, reminiscent of the GameStop and meme stock era [12] - The NASDAQ to Dow ratio surpassing dot-com era levels isn't necessarily concerning, reflecting a market bias towards growth and technology [15] - The S&P 500 PE ratio is at levels similar to the early to mid-1990s, suggesting valuations are still a third lower than the dot-com bubble [19][20] Investment Strategies and Asset Performance - Bitcoin's volatility is seen as a feature, offering a 33% average annual return between 2018-2025, but requiring investors to stomach a 51% average intra-year drawdown [21][22][23] - Berkshire Hathaway has lagged the S&P 500 since Warren Buffett announced his retirement, potentially due to his investment style and the types of businesses he owns [24][25] - Berkshire Hathaway's large cash pile (over $380 billion) presents a challenge in deploying capital effectively [34][35] Best Ideas Club and Vertive - Best Ideas Club interviews investors weekly to identify their highest conviction stock pick for the next 12 months [39] - Vertive, a picks-and-shovels AI stock providing liquid cooling systems for data centers, has gained 87% since being published in May [41][43] - The Best Ideas Club portfolio has almost doubled the S&P 500's performance over the last 39 weeks [44]