I detect a significant trend emerging in global equity markets. Enough participants are now doubting the ludicrous pricing of AI related stocks and the technology sector of the US equity market, as seen in the NASDAQ 100, had become highly volatile and I think is showing signs of becoming bearish.
Mid-month Musings – June 2026
I had decided a while back to use this publication slot to offer some illustrative numbers to support my often stated opinion that for most investors ‘buy and hold’ is not, on its own, the most advanatageous of options, even though I have no doubt at all that attempting to ‘time the market’ is a very unwise strategy. My proposition has been for a long time that staying in the market with the right assets, well diversified, is always going to make you richer in the long run, but you can enhance your returns and reduce your risk by taking profits when valuations look stretched, and then topping up your investments after a correction is obviously set in and the bad news is well and truly ‘in the price’.
Here we are considering the systemic risks and the trend in whole equity market valautions (although I use a focused equity market to make the point), not the relative value of different assets in the portfolio mix, although the principles adapt well to trading in and out of asset classes of all sorts, not just equities and cash.
for you
Is this a relevant issue worth your time?
This is one approach of contrarian investing and I have seen the merits of it for decades, although that is not to say that I am evangelical about the style – it is just a technique worth knowing about and using if you want to be just a little more advanced as an investor. Not adopting the methodology I propose will not damage portfolios that are well desingned to start with over the longer term, any more than driving a gas guzzler car will stop you reaching your destination in comfort: it is just that my suggested trading style improves efficiency and gives you more miles per gallon, or maybe Pounds per month.
I should mention that data which follows will not be easy to read on a phone and I recommend viewing on a large tablet or screen.
A Riddle
Q: What do you get if take a pee and see, then put in an n and a k?
A: if you start with SPACE, you get SNAKE.
The IPO of Space X is one of the most blatant corruptions of the regulations and institutions supposedly there to protect the public, a set of maneuvres akin to the trickery of the snake oil salesman. That is not my sole opinion, but one of many independent professional commentators and publishers.
Deep Dive – June 2026
‘To infinity, and beyond!’
Reportedly a comment from the Pixar Animation Studios equivalent of Warren Buffet, Buzz Lightyear, speculating yesterday on the Nasdaq composite index!
Well, no actually, although he has been known to utter those words, I don’t think a Toy Story animated spaceman will ever be seen as offering an alternative to the Wall Street Journal. Even though the film script writers are probably just as capable as the financial journalists when it comes to guessing next week’s stockmarket valuation.
The quotation is certainly appropriate to the staggering and in my opinion completely irrational performance of the US stock markets over the last few weeks, more or less starting one month after the invasion of Iran. Readers will know that this is mainly driven by all sorts of stocks loosely connected to the booming investment in AI infrastructure. That is not the same as saying it relates to booming profits or even actual profits growth for AI companies.
I have already set out some evidence as to why the underlying fundamentals suggest that this growth in equity valuation cannot be sustained (May’s Deep Dive), and some of those facts have even got worse since I wrote about them. So why is this all happening?
[Read more…] about Deep Dive – June 2026Mid Month Musings – Snippets
Deep Dive – May 2026
In this article, published slightly early as the facts change so quickly that it might be stale in a few days, I want to follow up on my April mid-month post comment stating that I believe that whatever behavioural factors are driving stock market valuations, in the end fundamental factors will serve to restore prices to levels that make sense in an investment world where owning one sort of asset is always at the opportunity cost of owning another with different risk and return characteristics. In other words, an overvalued asset class will always eventually be sold off to buy into a cheaper one – we just don’t know when that will happen.
What I thought might be useful would be to list out some of the fundamental data that suggest that equity markets have become detached from reality. You can make a judgment as to what, taken all together, this information implies for the immediate future and whether or not those implications would prompt action on your part to defend or enhance your personal wealth.