Okay. So, hello everyone. And first, let

me just say I'm really sorry that this

is going to be the last video that I'm

going to do before my retail rebellion

weekend live online event. So, be sure

to grab your free ticket by clicking on

the link in the registration box below

because all the best stuff I'm going to

save for this coming weekend. Very often

hear people comment that I'm staying out

of the US market or I'm selling my US

stocks because it's just too expensive.

It's it's a bubble. And who can blame

them? Because that is what the media

tends to push as a narrative very often,

especially recently. Again, if you look

at some of the headlines, it's a super

bubble in the US. Stocks about to pop.

Economists who called the 08 recession

warns stocks in a mega bubble. Do

profit. Albert Edwards who predicted the

2000 crash wars another bubble is going

to burst. Huge growth stock bubble could

sink the S&P 500 by 40% says Bank of

America. Interesting thing is that I've

been in the markets now for over 25

years and they've been saying this same

for the last 25 years. Every year

they tell you the market's in a bubble.

What's new? Okay. And I'm just going to

give you a couple of examples. If I show

you every single year, it's going to

take a few hours just for this video,

but just a few examples. So this is the

S&P 500 US market for the last 16 years

or so, right? Since 2008, 2009. And you

can see for example back in 2010 there's

a big article by the New York Times that

says that uh the market forecast that

says take cover markets are in a huge

bubble. Robert Preacher the market

forecaster said that we are entering a

market decline of the biggest in the

last 300 years. So this was in 2010.

This was like 15 years ago. There's a

bubble. It's going to biggest biggest

crash in 300 years. Right? And then in

2014,

uh, Goldman Sachs at the time said the

last time stocks were this expensive was

the tech bubble. They warned. So again,

they say it's a bubble over here. And

then back in 2017, Harry Dent said once

in a lifetime crash is coming in the

next 3 years. Did it come? Not not

really. Right. And then uh over here um

July 2020 as the market was recovering

the financial times said the coming

earning season could bring lofty stocks

down to earth. So again they say that

stocks are too expensive is a bubble.

And then over here we have got our good

friend Robert Kiyosaki. Uh by the way I

you know not all Asians are the same.

Let me just warn you that. Right. Uh do

you have a plan B? We are in the biggest

bubble in world history. This was back

in March 2022. And then uh over here

in April 2023, we've got Harry Dent

again, the same guy that said that he

had a once in a-lifetime crash back in

2017. Now he says, I expect another

crash in our lifetime between now and

June in 2023.

So my question is, how many lifetimes

does this guy have? I mean, is he a

freaking cat? Right? Does he have like

nine lifetimes? I don't know, right? And

then again recently in 2024 we have got

Kyosaki again says the everything bubble

stocks bonds are all going to crash.

We're going to die. Right? So every year

they tell you that stocks are too

expensive too. I've heard the same story

for 25 years. As you guys know I don't

make my decision based on narratives and

news headlines. I make my decisions

based on numbers. I'm a numbers guy. I

like to look at numbers right? And if

the numbers tell me the market is

expensive, sure I'm going to get out

right now. I'm going to sell. Right? But

if the the numbers tell me that the

market is not expensive, I want to keep

buying. So it it's all about the

numbers. So why do some people say that

the market's too expensive? Well, it

depends on what metrics you look at.

Now, some people they love to quote this

thing called the Buffett indicator. And

they said that the Buffett indicator

shows that a market is too expensive.

Now what is this Buffett indicator? Many

years ago, like 30 years, 40 years ago,

Warren Buffett said that he looks at the

market cap of the S&P 500, which

basically means the the market value of

the 500 stocks in the S&P, and you

divide that by the US GDP. And he said

that this should be below 100%. If it

goes above 100%, then it's going to be

very expensive. And recently, this

indicator has hit over 200%. And there

are a lot of news headlines that say,

"Oh, the Buffett indicator says that

it's a super bubble, right? And it hit

205% signaling extreme market

overvaluation. Is this a reliable

indicator?" Well, if you do your

research, the answer is no. In fact,

very recently, someone asked Buffett

about this indicator and he said, "Well,

I don't use it anymore. It used to work.

It doesn't work anymore." Why? Very

simple. 30, 40 years ago, this indicator

worked because the majority of the

profits that came from the S&P 500 were

from the US market. But as you know,

increasingly many of the S&P 500

companies are multinational companies.

So a bigger proportion of their profits,

in fact, some companies, 25 or even 50%

of their profits are not from the US

market. They are from all around the

world. and all these profits that they

make from all around the world is not

captured within the US GDP. You get the

point? So now the S&P 500 the market

value has gone up because it makes a lot

of profits like Nvidia and Microsoft and

and Apple but a lot of their profits are

not from the US economy. They're from

outside the US economy. So this is

increasing but it's not reflected in the

US GDP. Hence the indicator looks very

high but in actual fact many of these

companies are not expensive. Another

reason why some people say that US

stocks are expensive is because they're

looking at the PE ratio of the entire

market. The price toearnings ratio more

specifically specifically let's take a

look at the price divide by the forward

earnings ratio which is the share price

today divided by the projected earnings

of the companies over the next 12

months. So you can see that right now

the forward PE ratio of the S&P 500 is

22 times earnings. So is that high or is

that low? One way to judge is to compare

it with where it was historically. So if

you take a look at the last uh 10 years,

the average forward price to earnings

ratio of the S&P 500 was 18.4 times over

the last 10 year average. And the last

5year average was 19.9 times. So

currently is it above it? Yes, it is

above the 5-year and 10 year average.

So, does this show that stocks are

expensive? Yes, if you look at this

metric alone. However, I've mentioned

many times that PE ratio by itself is

very misleading. Why? Because it does

not take into account the growth of the

earnings, right? Does not take into

account the growth of the earnings. So

one thing to understand is that the

companies today their earnings are

growing much faster than they were 5 10

20 years ago and the profit margins of

the companies are three times more today

than they were 20 years ago. So you

can't compare today's PE ratio with the

historical PE ratio because companies

are growing faster with higher profit

margins. So a more fair comparison is to

use what we call the uh pack ratio. So

what is pack ratio? PE ratio is the PE

ratio

of the market or you can use a stock if

you want divided by the earnings growth

rate. Okay. So remember that a stock

with a high PE ratio can be cheap if the

earnings are growing double digit. That

is actually very cheap. Like Nvidia used

to have a very high PE ratio, but

because the earnings are growing very

much, Nvidia was actually very cheap.

That's why I bought Nvidia at $15 in

2022 when the PE ratio was 60 times

earnings. People thought it was

expensive. It was actually very cheap.

And from $15 a share, Nvidia is now

what? $50 $160 per share. All right.

But a stock with a low PE ratio like

Intel looks like a low PE could actually

be expensive because the earnings are

not growing. The earnings are declining.

Okay. So you have to always judge the PE

ratio in relation to the earnings

growth. And one way to do it is to look

at what we call the PE ratio.

So basically the higher the PE ratio the

more expensive. The lower the pack ratio

the cheaper. So what's the pack ratio of

the market today? If you take the PE

ratio divide by the growth of the

earnings of the companies, well, you get

about 1.4 something roughly about almost

1.5. So, is this high or low? Well,

again, if you compare it to the recent

history, it is not low, but it's not

very high as well. In fact, you can see

the pack ratio of the S&P 500 was at 2.0

uh back in 2023

or so, right? It was at over 2.4

uh back in 2020. It was

1.7 in 2016. And you can see over here

in 2010, in 2004,

in in the '90s, it was higher than where

it is today. So if you actually take the

pack ratio which is a better valuation

measure, the market is cheaper today

than it has been many times in the last

uh 30 years. I can tell you that if you

really want to know whether stocks are

cheap or expensive, forget looking at

the PE ratio, forget the Buffett

indicator, forget the PE ratio because

all these are just too general and they

just too vague. So let me give you an

example. If you just take a look at the

GDP per capita of the US, you may

conclude that oh all Americans are rich

or if you look at the GDP ratio of

Singapore, you may say, "Hey, all

Singaporeans are rich." Is that true? Of

course not. Right? It depends on in the

US which city certain cities are richer

than others. Depends on the household.

So to really get a picture of whether uh

stocks are cheap or expensive, you have

to look at the individual companies and

do a valuation of the individual

companies using a discounted free cash

flow valuation model or price to book

ratio or price to uh or discounted net

income uh valuation method. So that's

what we do at Puranum Profits. We drill

down to the individual companies. We do

a bottom-up approach to find out yes in

the market which are the expensive

stocks which are the cheap stocks are

and are there more expensive more cheap

and how do we focus on the ones that are

fairly priced or underv the high quality

stocks. Okay. So we have just uh used

stock oracle to run through all the 500

stocks in the S&P 500 and what we found

is that out of the 500 stocks yes there

are some that are very expensive. In

fact, out of the 500 companies,

155 companies are more than 20%

overvalued. So that makes up about 31%

of the stocks are very expensive. So

obviously you don't want to buy these

stocks. Well, not yet until they come

down, right? And about 12.4%

or 62 stocks are overvalued by more than

10% to 20%. But again in the market you

do have stocks that are fairly priced,

not too expensive, not too cheap, fairly

priced within plus - 10% of their

intrinsic value. And this would be 161

stocks in the S&P 500. And lo and

behold, there are stocks that are still

cheap. In fact, you can see that about

10.4% of stocks in the in the S&P are

undervalued between 10 to 20% below the

intrinsic value. And 14% of stocks are

very undervalued by more than 20%. So

you never make a sweeping statement that

all stocks are expensive in the US. No,

you've got cheap, you got expensive,

right? The key is how do you focus on

the ones that are cheap and not too

expensive and add the high quality ones

and avoid the expensive ones. What are

some of these specific stocks that are

good quality companies that are fairly

priced or underpriced? Well, if you want

to find out what you have to do, that's

right. You have to join me at Retail

Rebellion. My upcoming live online event

is going to span over two weekends. I'm

going to start speaking this weekend and

it's a free ticket. You can claim your

free ticket. You can register by

clicking on the link at the description

box below and I'll see you guys this

weekend. Okay, but don't worry. Let me

just, you know, give you some ideas.

Okay, so again, I'm going to show you

this entire list during Retail

Rebellion. But for now, I'm going to,

you know, tease you a bit with some

stock. So you can see for example KLA

Corporation which is really expensive

right now. You've got Walmart that is

pretty expensive as well. You've got

Broadcom a great company that is

expensive as well. American Express also

very expensive. So these are highly

overpriced. Uh then you got stocks that

are you know overvalued between 10 to

20%. Uh for example you've got stocks

like um CBOE which is the options

exchange. You have got stocks like uh

let's see Synopsis and a couple of

others over here. And then stocks that

are fairly valued between plus minus 10%

stocks like AMD, you've got Amazon, you

got Arista Networks, you have got

Electronic Arts, you have got Coca-Cola,

you got Lowe's and a couple of others.

And stocks which are undervalued like

PayPal, like Fizer, like Pepsi, like

pool corporation, like Troll Price and

you know Salesforce also undervalued

between 10 and 20%. And there stocks

that are very cheap right now like

Lululemon and you've got CarMax, you've

got um uh Craft Hinds and you've got BDX

as well. Now again bear in mind I keep

saying that just because a stock is

cheap doesn't mean that it's a good

investment. It has to be a high quality

stock that is undervalued. All right? So

you have to look at the quality as well.

And uh that's why I'm going to show you

in my webinar during retail rebellion.

What is my checklist of how I identify

the highest quality companies? The

companies that have got consistent

growth in revenue, profits, free cash

flow, companies that have got strong

economic modes, companies that I know

may drop temporarily, but they will

always bounce back higher. We call this

the tennis ball stocks. But some stocks

I call the the egg stocks, right? They

drop, they don't bounce back. Some of

them may even crack if they drop too

hard. So, look forward to seeing you

there again this weekend at Retail

Rebellion. Go to the description box

below this video. Click on the link to

grab your free ticket and I'll see you

soon.