The Quality Stocks Index Is A Screaming Buy… For The Long Haul

The gap between high-flying tech stocks – soaring far beyond their earnings growth – and companies delivering slow, but steady growth, has reached an extreme last seen in 1999:

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Quality stocks are underperforming the overall market at levels seen in the late 1990s. (Source: Jeff Weniger via X)

The S&P 500 Quality Index ranks companies not by market cap or a compelling AI story, but rather by fundamentals. Earnings, profit margins, and financial leverage. Reasonable debt.

You know, the kind of stuff that makes your eyes glaze over. And the type of companies we like to hold for the long haul in our model portfolio.

Today’s underperformance in quality stocks is another sign that we’re in a cycle where tech earnings are driven by a story, not by fundamentals – classic signs of a bubble.

While most data points we’ve reviewed indicate the bubble is still in its early stages, the Quality Stocks Index at this extreme is a sign of a late-stage bubble.

Today’s Quality Index gives you another reason to take some profits off the table now, as we’ve prescribed in thePlunge Protection Plan.

~ Addison

P.S. We’ve invited New Yorker, Andrew Zatlin, to join this week on Grey Swan Live! for obvious reasons: we want to get a boots-on-the-ground look at what incited young voters to elect Zohran Mamdani, a democratic socialist, to office in the world capital of finance. It’s an entertaining subject, at the very least.

With customary aplomb, we expect Zat to regale us with his thoughts on Mamdani, the purported exodus of finance bros to Florida and Texas and what the Federal government shutdown revealed about unemployment and the real economy behind the AI capex spending bubble. More to come…

If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.

The gap between high-flying tech stocks – soaring far beyond their earnings growth – and companies delivering slow, but steady growth, has reached an extreme last seen in 1999:

Turn Your Images On

Quality stocks are underperforming the overall market at levels seen in the late 1990s. (Source: Jeff Weniger via X)

The S&P 500 Quality Index ranks companies not by market cap or a compelling AI story, but rather by fundamentals. Earnings, profit margins, and financial leverage. Reasonable debt.

You know, the kind of stuff that makes your eyes glaze over. And the type of companies we like to hold for the long haul in our model portfolio.

Today’s underperformance in quality stocks is another sign that we’re in a cycle where tech earnings are driven by a story, not by fundamentals – classic signs of a bubble.

While most data points we’ve reviewed indicate the bubble is still in its early stages, the Quality Stocks Index at this extreme is a sign of a late-stage bubble.

Today’s Quality Index gives you another reason to take some profits off the table now, as we’ve prescribed in thePlunge Protection Plan.

~ Addison

If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.

With the United States conducting what the Pentagon politely calls an “operation” against Iranian military infrastructure, markets have had every reason to be panicky. Instead, the past week delivered something subtler…

Gold has been consolidating after a powerful multiyear rally. Yet with America’s gold reserves equal to only about 3% of federal debt, the metal could still have significant upside ahead.

The Federal Reserve can print money, but it can’t print oil. As energy prices surge and supply disruptions loom, the central bank may find itself with limited tools to fight inflation driven by real-world shortages.

The plan to release 172 million barrels from the Strategic Petroleum Reserve would leave the U.S. with its smallest stockpile of emergency oil in more than four decades. And with tensions simmering globally, the shrinking reserve raises uncomfortable questions about how prepared the U.S. is for the next supply disruption…

Gold has been consolidating after a powerful multiyear rally. Yet with America’s gold reserves equal to only about 3% of federal debt, the metal could still have significant upside ahead.