🗞 28x Isn't a Bubble, It's a House of Cards

WHILE YOU POUR THE JOE… ☕️

Are you not entertained?

NVIDIA opened a new $5 billion stake in Intel, just weeks after we gave it inside our free WhatsApp group at $19 per share. ✅ 

That’s a 53% return in a month. 🔥 

I specifically said it could jump on new regulatory announcements or even a takeover, well, close enough with the US government, and now NVIDIA buying it.

The process is easy, but it’s not simple.

Time and time again, we’ve given stocks to buy or short based on our internal stock picking process.

Which is the second-to-last part of the entire thing.

You see, there’s a reason professional traders barely use any charts and technical analysis at all (neither do we): 👀 

• Charts are readily available for EVERYONE to see, so are the so-called patterns

Just like a car or a watch, you know you’re getting a bad deal if it’s something that everyone has or has had in the past.

Novelty and exclusivity? That’s where value is.

So that’s what I will give you inside this free 5-day email crash course.

What you do with this information is up to you, but for God’s sake, go and make some money.

Speaking of NVIDIA, let’s get on with today’s email 📧…

NOT WHAT YOU THINK
Socialist Stock Market

We’ve all seen this chart; 2025 marks the most expensive S&P 500 in history.

However,

There is one major difference between today’s overvaluation and the ones that have come in the past:

• The most concentrated names in the market aren’t in bubble territory

Sure, a lot of people on Twitter call the Mag 7 a bubble, that AI is a time bomb waiting to explode, blah blah.

I do agree that the hyperscale spending toward AI is eventually going to eat into cash flows, especially as the return on investment hasn’t shown up in over two years.

But that’s a topic for 2026-2027.

For now, I think we can honestly say the stock market is showing some socialist tendencies. Here’s what I mean. ⬇️ 

The top ten names (in terms of weight) in the S&P 500 are trading in a flattish trend when it comes to forward P/E multiples.

Going back 25 years, it doesn’t even look like they are due for a pullback any time soon either. 🤷‍♂️ 

If all other stocks in the S&P 500 were trading at these normal valuation ranges, I think the overall index wouldn’t be in such bubbly territory today.

I mean, the entire group is valued at a forward P/E average of 28.5x today.

Back in the dot-com bubble?

The top stocks were valued at an average of 43.0x, so it’s safe to say these are far from being close to the panic trigger. 📉 

But,

Now the question becomes why the market is trading at such overextended valuations? After all, the top names are far from being considered “expensive”.

The answer lies in the other 490 stocks smooching off the success of the top 10.

This calls on the rest of the market (AKA the real economy) to make a decision.

According to Strategas, the S&P 493 is supposed to see an EPS expansion swing by the end of 2025, and whether that continues into 2026 is up for debate now.

However, look at that growth rate:

• From 2.6% to 3.0% over a quarter

• Mag 7 earnings are going from 22.8% down to 11.8%

In other words, the shining stars of the market (holding it all together) are going ex-growth as we’ve posted in this newsletter.

All the while, the ones supposed to take the responsibility and carry the economy forward are not going to cut it with 0.4% quarterly EPS growth.

That leaves us with the proverbial house of cards. 📉 

By the way, the market is seeing it too.

There are two schools of stocks that you should be aware of:

• $IVE = Value stocks

• $IVW = Growth stocks

In orange, you can see the spread between the two and how it has underperformed (growth beating value). 📈 

Fundamentally, this spread carries a negative relationship to the price of oil (in white). As growth takes over, more economic activity comes, and more demand for oil.

However,

That relationship has been broken for most of 2025.

The fact that oil isn’t bid while growth stocks outperform means one thing:

• Markets aren’t buying into the growth story, not even with Fed cuts

I mean, why would they? You can clearly see that with Mag 7 names going ex-growth and the rest of the market not growing nearly as much as needed, valuations are just plain comical at this point. 👀 

That’s exactly why you see equity risk premiums widening (in white) and diverging from the S&P 500 (orange) lately.

In plain English, this means stocks are being seen as riskier now.

Can you blame markets for having this view? I sure can’t.

Of course, this doesn’t mean the S&P 500 necessarily is going to crash, in fact I still think we see $7,000 on the index before 2025 ends.

But,

What this absolutely means is you should begin to rotate your exposure and strategy.

Simply put, what worked for you in 2020-2025 will ruin you in 2026-2030. As the market begins to rotate its weight, resetting to a normal stance across the other 493 stocks, trillions of dollars will be at play here. 💰️ 

And there’s no telling where they’ll end up, so you want to do two things:

• Be agnostic and unexposed to what the S&P 500 does

• Still make money from the rotation leading into renewed growth

And that is exactly what the mandate is behind our flagship strategy within long/short equity.

Part of it is finding winning trades like that $INTC call or even $BABA in the $80s; there are plenty of others that you know of if you’ve been with us for a while.

But that’s not the point.

In six months, you could either be:

1. Graduating from our program, and start generating pro-level ideas to implement or even sell in our investor marketplace

Or

2. Stay scrolling Twitter for ideas based on charts everyone has access to, relying on people who have NEVER traded through a rotation like this one before

Think it over, and kiss your 2020-2025 gains goodbye.

Sign up for The Sovereign Trader Program. ✅ 

To your success,

G 🫰 

GO AND MAKE IT HAPPEN
Lights, Camera, Trade

Speaking of long/short equity ideas.

Give me 20 minutes, and I will break down one of my latest, from top to bottom although compressing most of what we teach inside our program.

A perfect way to spend your weekend is to sign up for this free 5-day email crash course, download the attached Excels, and follow along the video. ✅ 

Trust me, it will change your trading career forever.

To your success,

G. 🥃