Many Happy Returns The Hidden Bull Market: The Stocks Defying the Gloom
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Mar 19, 2025 The S&P 500 is facing challenges, yet some sectors like defense and banking are thriving. The rise of European defense stocks amid increased military spending showcases an unexpected market shift. There's growing interest in the Chinese tech landscape, and Western investors are increasingly drawn to its growth. Meanwhile, gold prices are surging as European markets show resilience against rising interest rates. The discussion also emphasizes the importance of long-term strategies amidst market corrections.
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Unusual Correction
- The S&P 500 correction was concentrated in a few stocks, similar to the rally.
- The Magnificent Seven stocks dropped 17% from their peak, while the S&P 500 fell 10%.
Tesla's Tumble
- Tesla experienced the worst sell-off among the Magnificent Seven, down 34% in a month.
- Despite this, Tesla's valuation remains high at 80 times forward earnings.
Market Concentration Risk
- The market's high concentration in a few stocks was bound to correct eventually.
- The sell-off of overvalued stocks is a natural market adjustment.