To The Moon

Recent headlines are sounding familiar — warnings that U.S. stocks are looking “bubble-like,” with valuations at dotcom-era highs. The S&P 500’s forward P/E ratio sits well above historical norms, while margin debt has hit record levels. Yet volatility remains low, and optimism around AI and productivity growth continues to fuel the rally.

So, are we headed for a crash?

Not necessarily — but the risk of a correction is real.

Here’s the picture based on current indicators:

• Valuations are stretched — a 10–25% pullback would not be surprising.

• Market concentration in a few tech giants means sentiment shifts could ripple widely.

• Macro indicators like the yield curve are no longer inverted, suggesting recession risks have eased — but leverage and investor complacency remain high.

• Fundamentals, however, are stronger than in the 2000s. Today’s tech leaders generate profits, cash flow, and tangible adoption — not just hype.

🧩 My takeaway:

A moderate correction over the next year is more likely than a full-blown crash. Roughly speaking, the odds look like this:

• 60% chance of a correction (10–25%)

• 15% chance of a major crash (>30%)

• 25% chance the rally continues

Investors don’t need to panic — but they do need to prepare.

Take profits where positions are overextended, avoid excessive leverage, and keep liquidity ready. Markets can stay euphoric longer than expected, but history reminds us that cycles always turn.

“The time to repair the roof is when the sun is shining.” — John F. Kennedy