Part 5/8:
Moreover, Tom reported that the S&P 500 recorded back-to-back annual gains of over 20% in 2023 and 2024, an occurrence not seen for over 25 years. This oversensitivity to market corrections indicates a potentially precarious balancing act for future investor confidence.
Overvaluation of Stocks
Compounding these issues are concerns surrounding individual stock valuations. An example discussed was Palantir Technologies, which reportedly features a staggering price-to-earnings (P/E) ratio of 402, well above traditional thresholds for overvaluation. In Tom's assessment, this is a worrying sign, as it parallels levels seen in other tech companies before significant market crashes.