Some strategists see a stock market bubble – and this is not the magnificent fault of the 7 this time

• Actions assessments are increasing. Rather than the Mag Seven, look at the “Terrific 20”.

• The 20 formidable actions include various sectors, indicating an extended market beyond Big Tech.

• But some warn against “speculative fervor”, since the multiple prices, and not the benefits, are increasing.

Stock assessments become frothy again, but this time, it’s not all of Big Tech.

Yes, the evaluations of the seven magnificent actions – Apple, Amazon, Microsoft, Meta, Alphabet, Nvidia and Tesla – are saved after the bottom in April. However, the group’s ultimate price / profit / benefit ratio is still down compared to the levels of mid-2014, mid-2023 and 2020.

Meanwhile, the PE ratios before the next 20 actions of the S&P 500 continue to rise up, exceeding the levels observed earlier this year. Their evaluations are also higher than at any time in the past decade.

Arun Sai, a multi-active multi-network strategist at Pictet Asset Management, calls the “formidable 20” group.

Some may see increasing expectations in advance for an extended number of stocks as a sign of health, because the rally extends beyond the most popular actions.

But when actions increase due to multiple expansion instead of profits growth, it can be a sign that investors’ feeling is overheated.

“These companies cover a wide range of sectors more closely linked to the real economy, including finances, energy, industrialists, consumers and inherited technology,” Sai wrote on Tuesday. “Names like Broadcom, Walmart, Jpmorgan, Berkshire Hathaway, Visa and Ge Aerospace now represent around 17% of the MSCI US index, against 33% for MAG 7.”

“The wider participation is positive-when it is motivated by income,” he continued. “But when a larger part of the market is expensive, the story that” American actions are not too expensive, just a few exceptional companies “becomes more difficult to justify.”

Sai compared the current environment to the so-called bubble “Nifty Fifty” in the 1960s.

Richard Bernstein, the founder of Richard Bernstein Advisors and former chief investment strategist for Merrill Lynch, said in June that there were parallels with another famous episode of Euphoria – the Dot -Com bubble of 2000 – because the market seems only focused on emerging technology.

On Wednesday, Bernstein reiterated his skepticism from the rally, noting that the market is still relatively concentrated, even if the evaluations increase among the seven main actions.

The trading of leverage ETFs, zero-value-day-in-dollar action options also resumes signs of excess optimism, he said.