Everyone says this is a bubble. What if the numbers say otherwise?

追加: 2026-05-25

[00:00:00]Hi everyone, welcome back. Many people I speak with are really worried that a market crash is imminent. The Schiller PE ratio has reached its second highest level in 144 years of US stock market history. The only time it was higher was in December 1999, right before the NASDAQ lost nearly half of its value.

[00:00:21]The Magnificent 7 stocks now make up 34% of the S&P 500 by market cap. So, I totally understand everyone's concern.

[00:00:30]But what if this isn't a stock market bubble? What if the numbers beneath the headlines are telling a really different story? That's the subject of this video.

[00:00:40]So, let's dive in. The case for worrying. Before I dismiss concerns that a stock market crash is imminent, let's look at why it could be the case. The case that we're in a bubble really has three main pillars. The first one is valuation. Having a Shiller Cape ratio as high as it is currently is extreme.

[00:00:56]It's higher than 1929. It's higher than 2007. And as I said, the only month in history that beats this is December 1999. The second case for us being in the bubble is the concentration of value. The MAG 7 comprise 34% of the market cap of the S&P 500. Just seven stocks. If they fail, then everything fails. And the third reason is capex.

[00:01:19]Microsoft, Alphabet, Meta, and Amazon are between them spending 650 billion pounds on AI infrastructure this year.

[00:01:27]That's more than the entire GDP of New Zealand on data centers. If we stop the story right there, things start to look a lot like 1999 all over again. So why am I not worried? Let me convince you.

[00:01:39]Because in 1999, the companies that were driving the bubble had no earnings. They were not making any money yet. Today, if we look at the Mac 7, we have the largest amount of corporate earnings that we've ever seen in history. And that's the difference between being in a bubble and a market that looks expensive for a reason. Let me convince you further. The fundamentals, what the MAG7 actually earned. So, let's look at the most recent quarter, the quarter ending Q1 2026, and look at what these companies reported in terms of earnings.

[00:02:13]The revenue for the Mag 7 Group as a whole are up 24.6% yearonear. And that's not a hype number.

[00:02:20]That's real audited earnings. And in terms of the S&P as a whole, 84% of them beat analyst predictions for the past quarter. The S&P index is now on track for its 11th consecutive quarter of yearover-year earnings growth and its sixth consecutive quarter of doubledigit growth. Let me show you exactly why that last statistic matters. Going back to 1999, a company like Cisco was trading at over 100 times its earnings. But Cisco's revenue grew at 43% that year.

[00:02:53]And Cisco is an example of one of the good guys back in 1999. Below Cisco, there was a long list of companies that were making no revenues, no profits, but trading well above their earnings at that point in time. The bubble companies were valued on stories, not earnings back in 1999. Today's market is so different. Look at what these companies are actually earning. These are not 1999 companies. These are huge, profitable businesses with strong competitive advantages. And they are growing at a rate that you'd expect from a startup rather than a trillion dollar company.

[00:03:29]The Nvidia and Anthropic proof point. If I still haven't convinced you, let me give you the most striking data point from the recent financial reports. The revenue that Nvidia reported is an increase of 85% yearonear. They made 81.6 billion of revenue in a single quarter. And this is with a gross margin of 75%. Jensen Huang, the CEO of Nvidia, says that demand has become parabolic. And so you might ask, this is all very well, but who is exactly buying these chips from Nvidia? Are they being perhaps bought by speculative startups with no business models themselves such that the whole Nvidia business model will crash and burn? Well, no. Look at Anthropic, the parent company behind Clawude AI. Their annualized revenue went from 9 billion in 2025 to 30 billion for the year ending April 2026. To put that into perspective, Salesforce took nearly 20 years to reach revenues of 30 billion.

[00:04:24]Anthropic has pretty much done it from a standing start in 3 years. So, here's my bullcase in one sentence. The capex isn't speculative. It's catching up to demand that's already being paid in real revenue. This is the key part that the bubble narrative misses. Back in 1999, there were billions and billions being spent laying fiber that pretty much sat dark and unused for a decade. In 2026, their chips are already sold. They were already paid for before they leave the factory. That's the difference between the philosophy of build it and they will come and build it quick because we've already got them lining up to give us cash for it. The valuation question.

[00:05:05]Now, let's go back to that scary shiller number that's the second highest it's ever been. Here's the problem with Cape in 2026. The index it's measuring is structurally completely different than it was in 1929, 1999, and 2007. Cape averages 10 years of earnings, but the S&P 500 today is a completely different set of companies than it was 10 years ago. Think about it. In 1929, the index was predominantly railroad companies, steel and oil. These are businesses with typically brutal cyclical earnings. In 2007, it was banks and homebuilders.

[00:05:41]These were heavily leveraged businesses whose earnings could completely disappear overnight. And we know what happened in 2008. Today it's Microsoft, Alphabet, Apple, Nvidia, businesses with 30% plus operating margins, recurring revenue, and free cash flow conversion that those companies of the past could never imagine. And here's the most important part. Analysts have been estimating that the revenues for the Mag 7 will continue to increase, not fall.

[00:06:08]That's the opposite of a bubble pattern where revenue forecasts start to look disappointing before they crack completely. What's the difference this time? So, John Templeton famously said that this time it's different are the four most expensive words in investing.

[00:06:22]Let me argue against myself and tell you why I could be wrong. Number one, concentration is a real risk. If the MAX 7 fell by 30%, that's a 10% drop to the whole of the S&P 500 just because of those seven companies. Right now, the big AI companies are growing at astonishing rates. But if that growth starts to normalize instead of continuing to accelerate, then that looks like a hell of a lot of wasted capex. And the third reason, of course, is geopolitics. Nvidia reported zero data center shipments to China this quarter, and that's down from 4.5 billion a year ago. And the fourth reason is interest rates. If interest rates start to rise sharply, then that potentially has the impact of causing a decrease in the stock price to each of these companies. I'm not saying that a market crash won't happen. We can be certain that a market crash will happen at some point. I'm saying that all this bubble talk that is around us at the moment isn't matching what the companies are actually reporting. If you're retired or near retirement, I'm sure that you all know that investing requires a long time horizon. So, if you're retired or within say 5 years of retiring, you don't necessarily have a long time horizon ahead of you. You don't have 30 years to recover from a 40% crash in your investments. The concern for sequence risk of returns when you are retired is real. If you have a bad few years when you were first retired, that could mean that your portfolio never recovers from it. So irrespective of whether the bubble's about to burst tomorrow or in a few years time, there are some core principles that you can follow to protect yourself from sequence risk of returns. I've listed these principles on the screen because I've gone through them in other videos, but pause the video right now if you want to read more carefully. I hope you found this video informative and interesting. I'm not suggesting that I have a crystal ball at all or I'm able to predict anything about when a market crash might or might not happen. I'm simply aiming to add some balance to the debate because so many people are telling me that they are really concerned that they are about to retire just at the point when the market is about to crash. And so I hope that I've given you some reassurance.

[00:08:33]Time will tell how well this video will age. Thank you to all existing subscribers. If you are new here and you haven't subscribed, it would be so great if you take a second to find and click that subscribe button because it really helps me out. Thank you so much. And until next time,