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Bubble?
Everyone's asking him whether the current market's in a bubble. There are elements of a bubble -- you can see it in some of the sentiment readings. Some recent reading are at all-time highs in terms of institutional excitement over equities. Other surveys show not so much. There's no definitive tell for when it's a bubble.

Let's look at margin. The first chart shows how much leverage people are using in their trading accounts. (Banks have to keep these stats and report them to the government.) Margin debt is at all-time highs. Traders are using more options than ever before. ETFs that have 2x exposure. These are all bubble-like characteristics of euphoria.

But to say that this is the top, or this is the day before it all falls apart, nobody can tell you that. A topping process takes forever.

The thing that's different now from the past, is that earnings are really driving things. Earnings for the S&P for this last quarter were expected to be around $83. As earnings have come in, that number's going to be $100. Now, a large concentration of that is in just a handful of stocks. Earnings expectations for the next couple of quarters keep rising. As long as earnings expectations keep rising, and as reporting comes in as good or better, markets will keep going higher (regardless of all the other things that we're worried about). Whether geopolitics or inflation or rising interest rates, the market just doesn't care at the moment.

Where have earnings surprises come from? This quarter, we had a 30% upside surprise. AMZN and GOOG, for the most part, made up a huge part of the earnings surprise. Compared to previous quarters, these numbers cross almost all sectors. So the trend is broadening. The catalyst has been the "one, big, beautiful bill" and tax incentives.

Come 2027, we may have a new (Democratic) Congress and potential gridlock. It might be time to worry at some point. But for the next couple of quarters, we can keep going higher.

In the last 5 years, annualized return was 27% vs. the S&P's 13%.

There is demand for their chips. Claude, ChatGPT, all these AI applications need more chips.

Free cash flow is large and it pays a 3.5% dividend, better than peers. You need a stock like Apple to contrast with the high-beta semis stocks.

He recently sold this at $431, citing lack of momentum--that was not a good trade. He likes the fact that the new CEO is now buying back stock, being aggressive and putting his signature on the company. He bought $10 billion of Alphabet and Home Builders at $7 billion. Sure, some deals will not be good, but to make on omelette you have to crack some eggs.

Was upgraded today. It's the highest-quality healthcare stock. They have more than just the GLP-1 drug; are diverse with their entire drug catalogue. Exceptional execution. Good PE. 

She just bought it now for its cheap valuation at 18x. It's cheaper than Colgate or Hershey which has 3% organic growth, while Nvidia has posted 85% total revenue growth. Look at their backlog and customer base. Gross margins are around 75%. Free cash flow will double next year.

She owns the preferreds. Their industrials business was +24%, data centre +97%, aerospace/defence +45%. It trades at 20x PE and pays a 5.3% dividend. There's growth ahead. You don't have to own the big tech stocks.

It will drift higher to the mid-80s by year end.

Interestingly, the Magnificent 7 are no longer so magnificent. The group is up ~2% from 2 months ago, which trails the S&P 500 (which itself trails the equally weighted S&P 500). Seeing a broadening out of investor interest.

After 4 years of this capital spending arms race, we're starting to see trickle-down benefits flowing broadly into the mainstream economy. The most rabid enthusiasm is still in semiconductors, hyperscalers and memory, but we're starting to see some of the benefits of AI usage trickle down to garden-variety businesses.