[Music]

The stock market is very expensive. We

are in a bubble about to burst. At least

that's what most people are saying. So a

few notable people have said that stock

prices are way over valued starting with

Jerome Powell, the Fed chair. He said

recently that equity prices are fairly

highly valued. And then Lisa Cook, a Fed

governor, also said valuations are

elevated. Jamie Dimon, the CEO of JP

Morgan, said

asset prices are

at the top 10% or 15% of historic

valuations. We have got Jeff Bezos,

founder of Amazon, recently saying that

we are in an industrial bubble. And of

course, if you look at YouTube, almost

every mother, father, son is using the

word, you know, bubble, right? AI market

bubble, lots of bubble in US tech. We

have got early days of a bubble, AI

bubble about to burst. History tells us

this bubble stocks will not end well.

So, million-dollar question, is the

stock market in a bubble? Is it

overvalued? The answer is yes and no.

So, why? So, yes, there are certain

parts of the stock market that are in a

bubble. They are way over priced,

certain parts of the market. But then

again, there are also some other parts

of the market that are actually very,

very cheap. They're very undervalued.

But as a whole, I would say the market

is not cheap. It is not cheap.

But it's also not in a bubble.

Overall, okay? So, let me first talk

about the overall market why I don't

think it's in a bubble.

And then I'll talk about the parts that

are in a bubble and the parts that are

really cheap right now.

So, first reason, why isn't the market

uh in a bubble?

So, people who say the market is very

expensive, they are looking at certain

metrics,

uh like the PE ratio. And they're saying

that the PE ratio is now

uh higher than its average in the last

10, 15 years. But I've said many, many

times that PE ratio um

can be very misleading. Why? Because

whether a PE is high or low doesn't

matter

unless you look at the growth of the

earnings, okay? And it doesn't make

sense to compare today's market PE ratio

with the PE ratio 10, 20, 30 years ago.

Because companies are now growing their

earnings with higher profit margins,

which are in fact triple the profit

margins of companies 20, 30 years ago.

So, a more accurate way to measure the

overall value of the market is to use

the PEG ratio. I've said this many, many

times. So, the PEG ratio is actually the

PE ratio divided by the growth of the

earnings. That is a better comparison.

And if you take the PEG ratio, where are

we today? So, today the S&P 500, the PEG

ratio is at 1.36.

Right there.

Which says it is not cheap, but it's

also not at the bubble territory, okay?

So, to give you some comparisons, you

can see that the PEG ratio was in fact

above two

about 2 years ago, right? And just after

COVID, the PEG ratio is was above 2.4.

And it was 1.7 here. It was one close to

1.6 here, close to 1.5

something, right? So, if you look at the

PEG ratio today, it's actually lower

than many times in the last couple of

years. So, that's why I say the market

is not

in a bubble, right? It's not cheap, but

it's not that expensive. So, don't be

fooled by all these "Oh, the market is

in a bubble, right?" And more and more

people are beginning to compare today's

market with the dot-com bubble in the

year 2000. And the funny thing is that I

would say more than half the people who

are who are comparing it were too young

to be in the market in 2000. Not me,

right? In the year 2000, I was already

in the market. I started investing in

the US markets in about 1997. So, yeah,

I saw it firsthand, so I can tell you

that this is very different from the

dot-com uh bubble. Why? Because, number

one, during the dot-com bubble, the

stocks that were going up

like crazy, they were all these dot-com

stocks that made no money. They had no

profits. And anything with the dot-com

name just went up purely on a hype that,

you know, the internet will change the

world. But today, many of the companies,

again, not all, but many of the

companies like the hyperscalers, your

Amazons, your Meta, Microsoft, your

Nvidia, are they making money? Hell

yeah. They're making huge amounts of

free cash flow. There's huge profit mar-

profit margin. So, it's a very different

case. So, let's put the dot-com bubble

and the current situation side by side.

So, the dot-com bubble actually started

with the idea of the internet, all

right? And that started sometime in '97,

just before I entered the market.

And this current moment started with the

AI revolution with the launch of

ChatGPT, which was back in November

2022. So, you can compare this with

this.

Now, remember, ultimately, what makes

the market to be in a bubble? What makes

stocks in a bubble? It's when the the

price, the share price

is not supported by the earnings or the

cash flow of the company. Very, very

simple. Remember, the value of a

business is based on how much cash it

can generate, how much profits it can

generate. So, if the stock price goes up

100%,

but the profits go up 100%, it's not

expensive, right? Because the price is

supported by the profits. But if the

stock price goes up 100%, but there's no

profits, then that's a bubble. So,

understand that distinction.

So, what you see in this dark line over

here, so the dark line is the market

price of tech stocks back in 2000 or or

leading to 2000, right? And this green

line are the earnings of the company.

So, see the big difference?

During the dot-com boom, you can see

stock prices were going up like crazy,

going up like crazy, going up like

crazy, but the profits that were

generated by the companies were either

there was no profits or the profits were

very little. So, this is what we call a

bubble. It's kind of like profits are

here, market price is here. It's like,

you know,

it's the the market price is going way

above what profits are created. So,

eventually, what happens?

It will snap and collapse.

But in today's market, you can see that,

yeah, the stock price, which again is in

the dark brown, is going up, going up,

going up, going up, going up, but it is

supported by the profits. Look at that.

Profits are going up,

supporting the market. So, it's a very

different situation. And that's why I

say the market is not cheap, but it's

also not super expensive. But Adam, the

Fed chair said it is very expensive.

What the hell does he know? Okay? Now,

by the way, that triggered some memories

for me. I remember that back in 1996

December, at the time the Fed chairman,

Alan Greenspan, he said the same thing.

In fact, he said, which was back in

December 1996, he said that investors

are undergoing a bout of irrational

exuberance. So, what does that mean?

He's saying that the investors are

crazy. The market is in a bubble. And he

said that when the S&P was at 750

points. Now, what happened after he said

that? The market continued to go up for

the next 4 years by another 100%.

When it eventually topped out

in February 2000 before the dot-com

bust. And the S&P reached 1,500 points.

So, what am I saying? I'm saying that

the Fed chairman can say that we are

expensive, and the market can still go

up for the next 4 years

by 100%, right? So,

it doesn't mean we're at the top.

Now, could this time be different? Of

course, everything is possible, but I'm

just looking at uh probabilities. And if

you ask me, are we near the top? I don't

think so.

Now, another thing that you can look at

would be the history of bull markets.

Now, some of you may feel that this bull

market has run too far and too long. No.

Now, recall something. This bull market

started in October 2022.

All right? So, from October 2022 to

October 2025, this bull market is only 3

years old. We're only in the third year

of the bull market. Now, on average, how

long do bull markets last? These are, by

the way, what we call cyclical bull

markets, not long-term bull markets.

Short-term bull markets last roughly

about 5 to 6 years. That is the average.

So, for example, this bull market over

here

lasted 5 years.

And this bull market over here lasted 6

years. This bull market lasted 5 years.

This bull market over here lasted

11 years. And this bull market over here

lasted

12 years. So, bull markets can last from

5 years to 12 years. And again, in this

current bull market, we are only in the

third year.

Which tells me, based on normal bull

market cycles, uh this bull market

should run another at least two to three

more years, at least, okay? Could it

last another 6 more years?

Yes, it is possible. That's what

happened in this bull market that

started in December '87. Everything is

possible. Now, like I said, while the

whole market may not be in a bubble yet,

maybe in 3, 4 years it will be in a

bubble, but not yet. But there are

certain areas of the market that are in

a freaking bubble. They are really

overpriced, okay? So, what are these

areas? Well, I've identified five of

these areas. First are certain parts of

the AI industry. Now again, people like

to give a broad stroke. All AI stocks

are expensive. No, there are some AI

stocks that are not that expensive. For

example, in my opinion, well not my

opinion, it's a fact, all right? Nvidia

is not that expensive. It is not cheap,

but it's not that expensive. If you look

at ASML, also not cheap, but not that

expensive. Why? Because the stock price

has gone up, but the profits have gone

up even more than the stock price. So it

is not that expensive. But there are

certain AI-related stocks that are in a

bubble. Why? Because the market price

has gone up like crazy, but the

companies are not making any money. So

people are basically paying for future

profits. Oh, one day he's going to make

a lot of money, but now no money, all

right? So that's what we call a bubble.

Always check the fundamentals of what

you are investing in or what you're

trading. So again, if you look at

Nvidia, you can see that it is making a

lot of money. It is very, very

profitable. Take a look at that. You can

see that, you know, the revenue is

growing, the profits are growing, the

free cash was going growing is actually

making a lot of money. And the intrinsic

value, which is based on the discount

rate of all the future cash flows, the

intrinsic value is 175.

And right now the stock price is at 185.

It is slightly overvalued, but it's not

like super overpriced, all right? So not

cheap, but again not super expensive.

And ASML, same thing. If you look at

ASML, you can look at the fundamentals.

You can see that again, revenue is

growing like crazy and profit growing as

well. Free cash flow is, you know,

growing as well. All right?

Um and

the intrinsic value is 948. Now if you

recall, not too long ago I did share my

video at a time that ASML was below the

intrinsic value. It was cheap, but now

it has gone up, all right? And now it's

about 1,000 dollars 43. So it's above

the intrinsic value. So again, it is not

cheap, but it's also not super

expensive.

But if you look at some AI stocks, which

are not profitable, which I call

speculative AI stocks, then yes, they

are in a bubble. They are very, very

overvalued. So a good example would be

Corweed. Another one would be Nvidea. If

you look at Corweed, you can see that

again, uh if you look at the financials,

if you don't like to look at lines, you

can look at charts, right? You can see

that yeah, so revenue is growing, but

the profit is negative. So it is still

losing money. It's not making any money,

right? It's losing money. And you can

see that the intrinsic value is 115.

And now it's 133,

the the share price. So it's also a bit

expensive, all right? If you look at

Nvidea, for example, NBIS,

same thing. You can see that uh the

intrinsic value is $49, but it's now

selling at $125. So it's selling at

double what it is actually worth. And

you can see that it is also not

profitable. It is not making any money.

It's it's losing money. In fact, the

revenue dropped. It is not profitable.

Okay?

Now, so these are what I call stocks

that are in a bubble. Now, having said

that, would I short these stocks? No.

Can you still make money from these

stocks? Yes. Why? Because remember that

in the short term, the market is not

rational. The market is emotional. So as

long as there's momentum, people are

excited, these stocks can keep going up.

So expensive can become even more

expensive. Bubble can grow bigger and

bigger and bigger. So am I saying that

you can't make money with these stocks?

No, you can make money. You can make

money. But to make money in these

stocks, you don't invest in them. You do

short-term swing trading. It is a big

difference, right? So the difference is

that when you do swing trading, you have

to watch it very carefully. You only

enter the trade when there's a low-risk

trade setup based on the price action.

That's what we teach in our stock

trading course, our swing trading

course, right? And these stocks are like

a one-night stand. When you enter, you

got to have protection. You got to have

a stop loss.

And you got to have clear profit

targets. So that as long as the momentum

goes up, yeah, you can make money, but

the moment it drops, hits the stop loss,

you got to cut and get out. Why? Because

these stocks that are not supported by

fundamentals, eventually when they drop,

they will never come back.

They will never come back. So these are

the ones where you have to cut loss

very, very fast. These are what I call

the one-night stand stocks, okay?

But on the other hand, if you look at

companies like ASML, Microsoft, Nvidia,

where they are supported by profits and

they are not that expensive, these are

what I call stocks for investing. Not

one-night stand. These are the stocks

that we can marry. And when we invest in

these stocks, we know that three, four,

five years from now, they're going to be

a lot higher. And yeah, the stock price

could drop temporarily, but we don't

need a stop loss. Or rather, I don't use

a stop loss. In fact, the more they

drop, the more I buy, because I know

that these stocks, when they drop like a

tennis ball, they will always bounce

back up, because they are supported by

fundamentals. But these kind of like

Nvidea and Corweed, where there's no

fundamentals yet, there's no profits,

you know, they can drop and never come

back. So you got to have a clear

distinction between investing stocks and

trading stocks. So like I said, these

bubble stocks, you can still make money

from it. It can still go a lot higher.

And basically, we enter as swing trades,

right? So but you want to enter when you

see a low-risk entry. So for example, if

you look at a stock right now, is it is

it on an uptrend? Yes, it is. You can

see right, wave up, wave down, wave up,

wave down, wave up. And now it's on a

bit of a wave down pattern. So if I was

trading this, for example, I would wait

for again, wave up, wave down, wave up,

wave down, wave up. When it waves down,

for example, and it finds a support, we

call this a trend retracement strategy,

and we've got a bullish candlestick

pattern over there. Guess what? We could

take the trade. We could enter here

and place a stop loss right below the

recent swing low. Or if you want to

widen the stop loss, you can even put a

stop loss here, depending on how

conservative you are. And you can ride

it all the way up, all right? And you

can of course take profit, risking 1R to

make 2R, 3R. So you can make money in

these bubble stocks as well. But like I

said, as they go up, you have to raise

your stop loss. So when they eventually

burst, you got to cut loss and get out

fast and take your profits and run, all

right? But for like Nvidia, ASML,

Microsoft, don't need all these funny

stuff. No stop loss, no profit target.

Buy, close your eyes through the ups and

downs, you'll be very rich in the long

run. So big difference. Second industry

in a bubble, quantum computing stocks.

Yeah, one day will quantum computing

change the world? Yes, but right now the

market price has run ahead of

fundamentals. Many of these quantum

computing stocks are not making any

money now. Will they make money in the

future? Yeah, but not yet, right? So

stocks like IonQ, like RGTI, they're in

a bubble. But like I said, would I short

it? No. Could you still make money from

it? Yes, but you got to enter as a trade

and not an investment, because they

could drop and never come back once the

bubble bursts. And when will it burst? I

don't know. Who the hell knows, right?

And of course, cryptocurrency stocks.

Anything linked linked to

cryptocurrency, like your your strategy,

which is MSTR, nuclear energy stocks,

also running ahead of fundamentals. Your

Oak Ridge SMR, not making money. Price

going up like crazy. Can make money, but

trading, not investing. Be very, very

clear. So again, some of you may say,

"Adam, I don't want to do trading. It's

too stressful. I just want to invest."

Then stay away from these stocks.

Nothing wrong. But if you want to trade

it, these are the stocks to trade,

right? Then again, put a stop loss and a

profit target. These are things that

you can learn. Next, uranium enrichment

stocks, which are again tied to the

nuclear energy thingy, right? So stocks

like your ticker symbol LU CCJ, high

momentum, but bubble. Just be very

careful. If you're in any of these, make

sure you've got a stop loss. Make sure

when the bubble bursts, when it bursts,

I don't know when, you got to get out

fast. Take your money and run. All

right, so that's the end of part one of

this video. Be sure to subscribe, so you

get alerted once part two is ready. And

in part two, I'll be talking about which

parts of the market are undervalued.

Where are the hidden gems right now in

the market? And I'll also talk about how

do how do we prepare for the eventual

bursting of the market bubble. It will

not burst right now, but it will burst

eventually. And when that happens, you

got to ensure that your portfolio will

do well even when it bursts. So all that

in part two.

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This is Adam Khoo, and may the markets

be with you.