The Stock Market is Valued Here so DO THIS NOW (in depth valuation charts)
Application form to apply & try and get in my Private Stock Group/Financial Fortress
Well today we are going to go into the current valuation of the stock market. I am going to discuss with you if the stock market is overvalued, undervalued, or fairly valued. I am also going to discuss the reasons why this is important to know. I will go into depth and show you guys valuation charts that are important to look at.
Hope you enjoy this video where I explain to you why valuation of the stock market is so important. Leave me a comment with your opinion on this video! Are you buying stocks right now? Or are you holding off until the valuation drops more? Would love to hear your opinion on this topic!
Want to join our free STOCKHUB discord chat? Here is the link
This is where you can chat for free with other investors in the stock market about individual stocks or things going on in the market. Enjoy!
*My Instagram is : FinancialEducationJeremy
This is a Jeremy Lefebvre Production
Created by Jeremy Lefebvre
Hello guys welcome into today’s video hope you’re all having a great day out there as always so every once in a while on this channel we do what’s called a big stock market valuation video this is a video okay.
We’re we’re going to look very in depth at forward Pease current P’s price to sales ratios, peg ratios, all these different metrics in the stock market and break them into specific categories around growth stocks, value stocks, mid caps, large cap, small caps, super in depth video, that’s what we’re going to go into today.
I’m going to show you all this data, then I’m going to give you my opinion on this, I’m gonna give you three big points on my personal opinion on what to kind of do in the stock market right now, the way I’m looking at it, how much cash you should be holding, how much you should be investing, things like that. Okay, we’ll get all into this.
Now, why is this so important to look at the valuations of the market every once in a while? Something I like to look at every pretty much every month, if not every other month. Okay?
Why is this? Well, you want to know if it’s a time period where you should likely be buying heavy as far as like, like flooding money into the stock market, like buying everything in sight, there are certain times and the stock market where it makes sense to do that, okay, there’s a time period where you got to be buying light, okay, where you’re not going too heavy into stocks or things like that.
But you are still buying, hey, there’s certain time periods when you’re not really buying, all you’re doing is holding your positions in those other time periods in the stock market, where it makes sense to either sell specific stocks or sell all your stocks. Now I’ve never, you know, I’ve been the stock market 12 years, I’ve never been through a time period where it makes sense to sell all your stocks off.
But every once in a while, it definitely makes sense to sell some of these positions because it just quite frankly get over valued and you kind of run from the hills from some of those stocks. Okay, as you guys know, I always talk about 10 to 30% cash, right, I always talk about having 10 to 30% of your your net worth essentially, in cash.
It doesn’t mean actual physical cash, it could be money in savings accounts, checking accounts, it could mean actual cash, things like that, but money that’s ready to deploy, it could be money in brokerage accounts, and you get down at 10% number, if you’re investing super heavy in there’s deals everywhere, and you’re just buying, buying buying, right.
And sometimes I’ve gotten down there before I have I mean, I remember specifically back in kind of like November, December of 2018, I got all the way down at like 10% cash because I was buying just like everything signed essentially okay. And there’s other time periods where there aren’t very good deals, and you can get all the way up to 30% cash, and I’ve definitely been there, you know, a few different times in the past as well. Okay.
And so it’s very important whether you’re buying everything in sight, or you’re just kind of like not too interested in buying at the moment. So hope you guys enjoyed today’s video. As always, if you don’t mind smash that thumbs up button helps out the YouTube channel massively lets me know you guys enjoy a video like this where we go in depth on a big subject like this around stock market valuations where all these different things are at.
Also, if you’re looking to join my private group or try to join financial fortress, my private group and things like that, you definitely should do it either this week or next week.
And the reason being essentially is we are running a special for this black friday weekend Cyber Monday next week, essentially, where it’s like anybody that signs up for like a two year membership, you get a free month of coaching from one of our six figure seven figure coaches. So it’s like crazy value for the next two weeks.
So if you’re looking to try to join my private group, you have to apply you have to get accepted, you have to get on a phone call, things like that, and make sure you’re kind of a good fit for the private group and things like that.
And then you can move from there. And like I said, that’s a that’s a pretty awesome deal that they’re doing for the next couple weeks because that’s a tremendous amount of value like to get one on one coach by somebody that’s got, you know, mid six figures high six figures in the stock markets have a ton of success or you know, seven figures plus, like that’s pretty special.
So that’s gonna be linked in the description. Also have that as one of the pinned comments down there already. Guys, let’s start getting this. So what I want to start with here is I want to look at some research done by your deeming, okay, you’re in Dini, I always like these folks, for the candidate.
They just put a lot of really good charts that are super helpful to us trying to judge like what stock categories are worth looking into what or look like pretty overvalued right now, and things like that. Okay. So you were obviously looking at the market here today, everything’s up, but you can’t just look at the market and be like, well, Dow’s at 29,000. It’s overvalued or undervalued. You can’t just look at the s&p 500 be like s&p 500.
At 3500. It’s overvalued is undervalued. No, that’s not the way this works. Okay? Because if all you’re looking at is where the chart is for, like where that price action is, you’re not going to be able to, like decipher any information. I mean, because look at this. I mean, you go back to February, the markets about where it is back in February.
So if you look at just that it looks like oh my gosh, the stock market it’s it must be undervalued because it hasn’t gone anywhere since February. Right? But then you go ahead and you look at where the markets gone in the past seven months or so. And you’re like, Okay, yeah, the market looks like it’s a dang rip off right now.
Right? Because the Dow has gone from like 18,000 to 20,000 or whatever, right? That’s a massive massive difference there. So really, if you’re just looking at the pure charts, you can’t decipher anything. Look at the NASDAQ NASDAQ yesterday’s at 11,800. And it looks like oh my gosh,
NASDAQ must be massively overvalued. But the fact is, there are a few select stocks that really control like almost half of the NASDAQ Qk, apple, Amazon, Google, the FB, Microsoft, Intel sumayya. So because it’s gotten so big now, those ones have a dominance of control on whether the NASDAQ goes up and down and given day, guess what? all six of those company doing amazing, okay, absolutely amazing.
So they make the NASDAQ look a whole lot better than it really is. And that’s something very, very key to pay attention to here, guys. Okay. Alright, guys. So let’s start going through some of these charts that Yardeni has for us here. Okay. So the first one here, I want to look at this looks at s&p 500. Large caps, okay, and we’re looking at four p e ratio.
So essentially, the next four quarters versus where the stock price is, this is a very important you guys always know I talked about four p, I love the four p metric more than any other metric in the stock market by foreign, okay. And so if we look at this, it looks really high. Okay, when it comes to s&p 500, large caps in the 40s, it does look very high,
There’s no doubt about it. But keep in mind, this is kind of a trick a little bit. Because remember, 2021 is it’s not like all these companies is going to be back to normal, right? That’s just not the way this works. Okay, so it’s tricking us a little bit in making a look a lot more expensive than it is 2022. A lot of these companies earnings are going to come back and a major, major way, in a lot of these companies are probably going to get back to some what where they were before, that’s probably not happening in 2021.
Right, some companies will get back there. But most of them will get really back and back in a major way in 2022. Because remember, the first couple, let’s say, quarters of 2021, we’re still going to have Roni fears.
We’re still going to have some lockdown situations, it’s a way it’s going to be the second half of the year, things can start to heat up a little bit and then moving into 2022. Okay, so 2020 one’s a little bit of a trick, but if you’re just looking at it from a pure standpoint of is it high, it looks high right now. Okay.
I just think it’s tricking us a little bit. Okay. s&p 400. Mid caps, we’re getting a little different story. s&p 400 mid caps, as far as therefore, peas 19.2. This is much more interesting. This isn’t bad at all, I would say okay, it’s, it’s certainly not like, Oh my gosh, things are so cheap right now. But that’s not bad. Because remember, this is looking at the next four quarters versus the stock price. And remember, the next four quarters, a lot of these companies is not going to be like so amazing.
So if you’re looking for the mid caps, much more interesting. I mean, much, much, much more interesting than large caps. Not bad at all. Okay, small caps. Same exact situation, s&p 600 small caps are at 19.3. So when you’re looking at this, you know, this year, it’s not like it’s cheap once again, but at the same time, it’s not like oh my gosh, those are so overvalued mid caps and small caps.
Okay, so so far, what what can we like decipher from this information? The big companies for the most part look overvalued right now. mids and smalls are at very fair valuations. Okay.
So this means essentially, a lot of those companies that had between a $1 billion market cap and a $10 billion market cap, they look pretty darn attractive maybe even up to like a $25 billion market cap but when you start getting to a lot of these companies that are 50 billion 100 billion plus a lot of them to be quite frank look very overvalued as of right now. Okay, now, that’s just one part of things.
Okay, I want to go ahead and look at the Russell 2000 now we’re going a lot more broad here. Okay. When you look at the Russell 2000 growth, okay, four p ratios for the growth side of the Russell 2000 they’re ridiculous, okay, there’s no other way of putting it, I mean, they have to cap it at a 60 Okay, that mean that number is capped at a 60 Alright, so essentially what you’re looking at in this chart here is just the fact that growth stocks in the Russell 2000 are trading at silly ridiculous valuations.
No doubt about it, no other way of putting it but then if we go ahead and we look at the Russell 2000, just in general, it also looks high. Okay, now there’s a big difference between the Russell 2000 in general and just a growth category.
So it looks looks more toward fair, but it’s still very, very high. And I think a lot of that is basically because of the Russell 2000 growth category is just so insanely overvalued right now that it’s making the entire Russell 2000 look like it’s much much richer and keep in mind and the Russell 2000 you got a lot of smaller companies, a lot of smaller businesses have been hurt worse than the big companies when it comes to running run.
Okay, now a lot of the smaller businesses will likely come back even stronger in the back half of 2021 and 2022. When it comes to earnings growth, they’re likely way exceed what a lot of these other companies these bigger dogs are basically going to be putting up you know, for the back half of next year and especially moving into 2022 in terms of earnings growth, okay, so yeah, definitely Hi there.
Now value values where things get interesting look at Russell 2000 value nine tene point six. Okay, this is where real opportunity is in the market in the Russell 2000. Right now, the value stocks, okay, now the value stocks aren’t that sought to always attract people, right?
Everybody wants the next Tesla or they want Tesla, right? Or they want apple or they want Microsoft, they want Amazon or they want the next Shopify or they want Shopify right, or they want zoom. That’s what a lot of people want. Okay.
But the fact is, sometimes there’s there’s certain time periods in the market where the value stocks, the non sexy stocks, or are really the deal, okay? And this is why it’s so important to be a good investor when it comes to grow stocks.
Value stocks, dividend stocks across the board, because sometimes growth stocks are rip off and you got to go to those value stocks. Sometimes value stocks are kind of a rip off and grow stocks are trading really cheap, because everybody’s scared.
and so you kind of got to know where the opportunities are and how to find the stocks. But value man values actually looking pretty darn attractive right now in the Russell 2000. So what we can kind of decipher from more of this, if you’re looking at growth versus value growth, very expensive, just flat out when we say very expensive, we mean off the charts expensive when it comes to these growth companies. Okay?
It’s, you know, it’s doesn’t mean every single grow stock in the world is super overvalued, but many of them are right now. Okay. However, value stocks, very fair, they’re not cheap, but they’re fair. And there’s a big difference. And that mean when you can buy stocks when they’re fair, okay? There’s nothing wrong with that. But man growth is a little scary right now. Okay, look at this here.
This is for P e ratios for us small caps, okay. And so if we’re looking at Russell 2000, once again, we’re 32.4 very high. But when we look at s&p 600, small caps, we’re at 18.8. And remember, a lot of these companies are going to come back way stronger, I mean, way stronger in terms of their earnings growth in future years, then essentially.
A lot of the big guys are okay, a lot of the big guys have seen some of the earnings dip, a lot of them have already seen earnings come back to small a lot of the smaller companies, they’re gonna see things come back in the back half of this year moving into next year.
So this is another thing that’s pointing to small caps, guys, small caps values, okay, small caps values. This is where we’re getting some real attractive valuations right? Now, these next two charts I’m gonna show you here, they’re looking at peas, and I’m talking about trailing peas, which isn’t the thing I like to look at the most.
but you know, we got to still look at it. Trailing peas, and we’re also going to look at the next chart is going to be price to earnings growth after this one, okay. When it comes to s&p 500. Okay, now when we look at this just at the Pease, okay, the s&p 500, obviously, it looks scary, right? 21.7 were valued. I mean, the highest since literally the tech bubble, right back in the late 90s. into 2000. Right.
That’s, that’s just downright scary. But keep in mind, earnings have been devastated for a ton of companies in the s&p 500. They just fell off a cliff. Okay, that’s not going to stay that way. Okay, the back half of 2021. And movie in 2022, a lot of these companies earnings are going to come back very strong.
But as of right now, it makes it look like the s&p 500 is so insanely overvalued. It’s ridiculous. But you know, it’s honestly just at the end of the day, it’s just because a once in 100 year event came out of nowhere and smacked a ton of these companies like never before. Okay, we’re looking at price to earnings growth.
this is pretty interesting. So price to earnings growth is at a 1.9 right now, okay? It’s still very high, you know, what you’re happening to pay for growth is still very high.
That’s kind of what you should think about when you’re looking at a peg ratio, what you’re paying for growth, okay. And so we’re high, but we’re coming down. So you know, like I said, we’re high, but we’re coming down. So it’s kind of like, you know, you got one good side, and you got one bad side, the bad side is things are still high.
The good side is numbers are coming down, it’s coming down in terms of what you’re having to pay for earnings growth. Okay.
So that’s peg ratio right? Now, also, if we look at this here, this is looking at forward p e ratios for the s&p 500 index in general. And if we look at the s&p 500, in general, we’re looking at numbers that are like a 21.9. Right?
Which is high, no doubt about it. its highest in in recent times, right. But once again, we’re kind of getting this trick situation where Yeah, a lot of these companies earnings aren’t going to be that great for the next couple quarters.
Okay. But as the vaccine gets out there, as the economy starts to get more normalized as business starts to be able to open back up as a lot of these cities and their restrictions start to open back up in the in you know, kind of like the middle of 2021 and moving in the back half.
You know, you’re obviously going to have money velocity start to pick up corporate earnings start to pick up hiring start to pick up and you know, things get back on the right track, right. So that’s what we’re kind of getting tricked again here. Now, s&p 500 technology. Remember, a lot of these tech players haven’t been hurt, a lot of them have actually benefited from Roni Ronan, right? And if we’re looking at those as 26.2 high okay.
It’s very Very high revenue, the only good news is the numbers are coming down. So that’s fair, but the numbers are still high, just no doubt about it. Okay. Now this next chart I’m about to show you, this might be the most telling chart of any of these.
I’m going to show you okay? And then after this, we’re going to start getting into kind of, you know, my two cents on this and some advice with this. Okay? This might be the most telling chart, okay? Wow, look at this. Okay, we’re looking at growth versus value. Now we’re looking at for P e ratios for the s&p 500.
Growth versus value. Growth is off the charts. Okay. 27.3. That’s an ouch but value stocks as far as for PE ratios and sp 500. They’re very Okay, you know what I mean? There’s, there’s no way you can say that’s massively overvalued, you also can’t say is massively undervalued. But it’s very fair to say that value stocks are the play right now.
It really is. growth, my goodness, you’re paying through the nose if you want anything with major growth in this market right now pretty much for the most part, you’re paying through the nose for okay, but the value all of a sudden you look at that and you’re like okay, I can’t deal with that. Okay,
Now if we I go on my stock tracker app here Okay, I have a ton of different categories here of like list of stocks that I keep track of and things like that including like my stocks, which is kind of looking at all my different stocks.
I have like a random list I have a stock some like buy soon kind of list. And then I have this one specific one here called no valuation care, and it has six stocks in it. Now there’s a lot of stocks in the stock market could put in there, but it’s kind of six core stocks that unfilled almost everybody in the stock market knows about these stocks and a lot of times these stocks just don’t trade like valuation matters. Okay.
It should people want in these stocks, because usually they have big stuff they’re going after, and the opportunities just massive for the company’s long term.
And so people don’t care about short term metrics. They don’t care about valuation, they say they’re buying these Okay, these six stocks are Tesla Massa snowflake Amazon cheap bought a Shopify zoom.
Okay, I like I said, I could add definitely a lot more stocks, but that’s enough. Okay. And so if I’m looking at that list today, it’s interesting because the markets all green, you know, it’s not like a great day in the market, but it’s pretty good, right?
And three stocks are up, three stocks are down, and Amazon’s like, right around breakeven, so that could even finish red today, we’ll see what happens. Okay. But it’s not like all those stocks that are in the know, valuation care are doing amazing, right,
Tesla’s really the main one that’s doing amazing right now that has starting to get a ton of hype around it again, not just because of Tesla’s business model on what the numbers are that are they going to put up over the next few years, but obviously, the s&p 500 inclusion that’s happening in a few weeks from now.
And so that’s getting like everybody super hyped about that stock. A lot of trader money’s getting in that stock again. So that one’s just, you know, that one’s kind of an exception of the rule. Okay, my two cents with all this, okay, I’m gonna give you three things here.
Okay. Number one, a three, be very careful of growth stocks, right now, if you’re thinking about putting your money in growth stocks, look, look again. And look again, okay, make sure you are, you know, you should always be doing maximum research when you’re looking at any of these stocks. But my goodness, right now is it is, you know.
Unbelievably important to make sure you are like diving in and diving in and diving in before you ever put money in any type of major growth stock right now, because I’m telling you a lot of these growth stocks in the market are our rip offs to be quite frank, okay.
Just like there’s no other way of putting Okay, so before you buy any of those, those guys, man, you you, you better be looking looking looking because I you know, some of those growth stocks, they’re gonna come down, they’re gonna come down fast, and you can be down 3040 50% on some of those in a very quick amount of time. And keep in mind with some of those growth stocks, they could come down 3040 50% still be expensive. Okay.
Okay. Make sure you look Look, look again. Okay, number two or three, be on the lookout for being down Rona dogs, okay. These are stocks that essentially had been beaten down by the Roni, Rona, okay. And they’ve been, you know, kicked and kicked and kicked and no one cares about these stocks.
And everybody just forgot about them in the corner over there. And a lot of these companies, they have had their businesses devastated because of Ronnie Brown, okay. But as Ronnie Ronan starts to go to the backdrop in 2021, as we move on, vaccines come out and and things kind of transpire and, you know, eventually the Rona will be a thing of the past, okay? And there’s a lot of stocks out there that are going to benefit massively from this.
And a lot of those stocks are already starting to move. And if you want some examples, I’ll give you three different examples. Okay. So one example is Nordstrom. Okay, look at this stock here. Today. It’s over 11% this stock is up. We just looked at the market, right? None of the indices are even up 1% in nordstroms up 11.5%.
But look at the stock chart on this. In the past like two three weeks, the stock has gone from $12 to 23k. The stocks almost doubled up in a matter of what a couple weeks that Unbelievable November 6, you can buy a stock for $12.83.
Here today, November 23, it’s 2375. Okay, when these stocks start moving, they start moving fast. Nordstrom is a perfect example of a stock that has been kicked and kicked and kicked. And Wall Street doesn’t care about that stock, they forgot about that stock. And this is a company that was gonna always kind of make it through their own your own. And guess what, they have a big online business that’s expanding rapidly.
And guess what you don’t need to actually go to a physical store to buy nordstroms products, okay. And never mind as more and more people start to go to physical stores again, in in, you know, this whole, you know, fear of getting the Rona because you go out, as that starts to fade throughout 2021 and especially moving into 2022.
Nordstrom is going to be there to be a great business model again, and likely be a profit machine again. And everybody forgot about Nordstrom Okay, when they start moving, things start moving, fast winning resorts, another perfect example, obviously 100% dependent upon travel to Vegas, Macau in Boston, right. And everybody forgot about this stock kicked it while it was down. We don’t want any piece of that.
It’s a great business model anytime like there’s the like things are normal. This is a very profitable business is a beautiful business case. It does amazing numbers. And everybody forgot about it. And you know, you go back less than a month ago the stock 69 bucks, you buy it today at 95. Anybody that bought the stock in the past month or two is has made an incredible amount of money.
That’s the best way to put incredible amount of money. Same exact thing when Nordstrom anybody’s bought that stock within the past couple months has made tremendous amounts of money. Okay, another stock that is a perfect example Royal Caribbean krcl look at the stock the day before Halloween, the stocks 51 bucks today at 75. I mean, that’s the thing with being down dog stocks k that everybody forgets about when they start moving, these are moving fast.
Okay, that’s the best way to put it, man, then that’s why, you know, when I did that Nordstrom video when the stock was like, I think it was like two months ago, right? I did a Nordstrom video. And you know, in that video, I went out there and I said that stock will to x fast, right. And I did that video like couple months ago.
And and for me to make a short term stock price prediction is really me sticking my head out there. You guys know I hate doing that. Right? I like to be the guy that focused on long term, the next three years, five years for the business, for me to go out there on a YouTube video and say that I believe that stock was going to 2x or more in the next 12 months. You know, you know, I gotta I gotta really be confident to say something like that, right?
But because I know that’s the way these stocks are man. When they start moving, they start moving fast, you got to get your position built, and then you just got to hold on to the roller coaster, man. Okay, number three, a three value stocks are the opposite. Okay? value stocks are the real opportunities in this market. This is not a great market,
if you’re trying to buy super high growth companies at the moment. It’s just not okay. A lot of these companies are either already starting to fall or they will likely start to fall over the next couple months. Okay. But value stocks or the ops, okay.
And by the way, there’s a few good growth stocks out there. Don’t get me wrong. There’s a few of them. Okay. But I can tell you for every one good growth stock, there’s probably nine bad growth stocks right now, maybe 10% of growth stocks are actually a deal right now. It actually makes sense to buy 90% of growth stocks don’t make sense to buy right now. Okay, so value stocks are the opposite.
Because I would say is much more of like a 5050 with value stocks, where 50% of them are good buys 30% of them like an okay, it’s a good time right now to be 15 to 25% cash, in my opinion, you don’t want to be all the way down to 10% cash because I don’t feel like right now is a time where you just want to be flooding money into the market. However, I don’t think you really want to be 30% cash right now, because there are some good deals out there.
They’re like I said, you know, there’s still 10% of gross stocks are probably a good deal. Okay, so that leaves you on a huge chunk of the market. Right. There’s a massive amount of value stocks out there that are interesting deal.
Right. And then you still have some of these Rona, Rona, you know, being down dog stocks that are likely interesting valuations. Okay. So I feel like it’s a time period where you want to be a holder of stocks, and you want to be a light buyer of stocks. You don’t want to be flooding money into this market, but to buy lately on some of these interesting value propositions, and maybe some of these beaten down dogs.
Okay, now we’re talking, okay, so it’s a time where I feel like you’re holding or you’re lately buying, you’re not heavy buying and you’re not selling necessarily, unless it’s a stock that’s massively overvalued. You feel I feel like 15 to 25% is really good. Okay.
Now, if you’re looking for more specific stock in the market that are pretty interesting, check out a couple of videos I produced here. Okay, what is this video that came out with just a day or two ago, okay, it’s called Five stocks to buy under $10.
That goes into some interesting stocks. They’re, it’s one of those videos that you know, if you’re even not interested in any of those five stocks.
I mentioned in that video, it’s and that’s on financial education too, by the way, it’s a great video to check out and give you some starting points to kind of start doing some research and you start looking at these stocks and like that’s not really interesting, but then you start seeing other stocks in that category and then you might find one you’re interested in.
Okay, so that video was put on financial education to really helpful Okay, a video I put out last week here on the main channel, I think is really helpful called my new top seven biggest stock market investments, put that on the main channel. And that’s another one of those videos that even if you’re not interested in any of those seven stocks, they’re a great starting point.
So you can continue to do some research and maybe other stocks in the industry and it makes you think a little bit differently about some other stocks you might be looking for out there and it gets you on kind of the right track. Okay, hope you guys enjoyed this video. As always, if you don’t mind smash the thumbs up.
As always, I appreciate each and every one of you in the thumbs up squad you help out the YouTube channel in a massive way.
I appreciate you, okay, also make sure you’re subscribed to the channel. Once again, if you’re trying to get in my private stock group, make sure you fill out the application and try to get in there within the next week or two if you’re allowed to essentially because like I said like that that deal they’re doing essentially where you get a you know for anybody that signs up for two year membership, you get a free month of one on one coaching and the access to those those individuals.
That’s a pretty epic thing. Needless to say. So yeah, make sure you take advantage of that. I’ll have that as one of the pinned comments down there. It’s also linked in the description. Thank you for watching and have a great day.