The S&P 500 is overvalued according to traditional valuations, at least that is how it appears.

1. historical overvaluation and current key figures

Overvaluation based on historical data:

• 19 out of 20 valuation metrics indicate that the S&P 500 is more expensive than the long-term average.

Current valuation figures:

• The P/E ratio is currently around 30.5.
• The price-to-sales ratio is currently around 3.2.

These values show that the index is considered "expensive" by traditional standards.

2 Why is the S&P 500 so highly valued?

Dominance of mega-cap stocks

The S&P 500 is currently undergoing a transformation that is characterized by the increasing dominance of the Magnificent 7 ($GOOGL (-2,28%) | $AMZN (-2,39%) | $AAPL (+0,26%) | $META (-1,11%) | $MSFT (-1,57%) | $NVDA (-3,63%) | $TSLA (-4,32%) ). Companies such as Apple, Microsoft and Nvidia play a disproportionately large role in the index due to their market capitalization-based weighting. Although their strong growth, stable profits and their positions in key sectors such as AI, cloud computing and chip tech justify higher valuations, their share of the total market value of the index has increased significantly in recent years:

While they accounted for less than 10% of the index some time ago, their aggregated share is now around 30%. As a result, the expensive valuations of these mega caps distort the overall assessment of the S&P 500. The more moderate or even favorable valuations of smaller companies in the index are often masked as a result, which entails the risk that the apparent "inflation" of the overall market reflects Mag 7 rather than the broad market reality.

More robust company fundamentals

Many companies today are targeting recurring revenue streams such as software-as-a-service or subscription models, which allow for greater predictability of cash flows. This strategy not only reduces cyclical risks, such as less dependence on one-off sales or cyclical markets, but also creates a more reliable foundation for long-term growth. At the same time, companies have optimized their balance sheet structures through lower debt, high cash reserves and more efficient capital allocation, for example through targeted share buybacks or investments in profitable growth. These factors support higher valuations as investors are willing to pay a premium for stable earnings and lower default risks. Taken together, these developments mean that the seemingly high valuations of the S&P 500 may be justified not only by speculation but also by fundamental improvements in business models and financial discipline

Strategic change in companies

A key trend in corporate strategy today is the prioritization of efficiency & profitability over aggressive expansion. More and more companies are focusing on operational perfection and rather low-capital business models, comparable to cloud services or software. This focus not only reduces dependence on expensive infrastructure projects or physical assets, but also increases margins and resilience in volatile markets.

At the same time, there has been a profound structural change in the S&P 500, as the proportion of traditional industrial companies has fallen from 70% to around 50% since 1980. This development reflects the rise of digital, tech sectors, which are characterized by their scalability, global reach and often higher profit margins. Sectors such as software, cloud computing and AI are increasingly dominating the index, while capital-intensive industries are losing weight.

3 Risks and counterarguments

The risks and counterarguments to the current situation of the S&P 500 can be summarized in three main points. Firstly, there is a concentration risk as the index is heavily dependent on a small number of tech companies. If these companies are affected by regulatory measures or unexpected slumps in growth, this could weigh on the market as a whole. Secondly, the index is sensitive to interest rates. Rising interest rates could put pressure on high valuations even for companies with solid fundamentals, as higher interest rates reduce the attractiveness of growth stocks. Thirdly, the current valuation premium is based on the assumption that companies will achieve their optimistic earnings forecasts. If these expectations not If these expectations are not met, there could be a correction, as valuations could then be seen as excessive.

From my perspective, comparing today's S&P 500 to historical valuations is difficult as both the composition of the index and the business models have changed significantly. The dominance of tech and the shift towards more efficient, scalable business models make the index different today than in the past. I also see that the current high valuations of the S&P 500 are not necessarily excessive, but could be partly justified by structural changes. Market conditions have adjusted and higher multiples may reflect a "new normal" due to changing guidance on corporate earnings and market stability. Nevertheless, it remains important to keep an eye on the risks, as valuations are heavily dependent on the fulfillment of these optimistic expectations.

Have you ever wondered where the big investors put their money? The fourth quarter of 2024 saw some exciting changes in the portfolio of Bridgewater Associates, Ray Dalio's renowned hedge fund. Two new stocks made it into the top ten! 📈

The main players include tech giants such as Alphabet $GOOGL (-2,28%)Amazon $AMZN (-2,39%) and Microsoft $MSFT (-1,57%) . AMD $AMD (-2,29%) and NVIDIA $NVDA (-3,63%) are also strong. Bridgewater's total portfolio amounts to around 21.81 billion US dollars, which underlines the importance of these investments.

The SEC requires institutional investors to disclose their holdings on a quarterly basis. This ensures transparency and gives small investors a glimpse into the strategies of the big players.

What do you think of the current trends in the tech sector? Will these stocks continue to be a good choice?

The introduction of DeepSeek with its R1 model has really shaken up the financial markets. While NVIDIA $NVDA (-3,63%) and OpenAI are coming under pressure, we see other companies such as AMD $AMD (-2,29%) and Intel $INTC (-4,07%)presenting themselves as beneficiaries of the new AI era. 😲

But what does this mean for us investors? The current market turbulence not only offers risks, but also opportunities. Some stocks have already fallen, such as Meta $META (-1,11%) and Microsoft $MSFT (-1,57%)but other stocks such as Amazon $AMZN (-2,39%) and Adobe $ADBE (-2,14%) are also down.

How are you feeling about the situation? Are you on the lookout for bargains or are you remaining cautious? Discuss with us: Which shares do you see as the big winners of the AI revolution? 📈

JD.com - The Chinese e-commerce giant with potential for 2025?

JD.com ($9618 (+3,16%)) is one of the leading e-commerce providers in China and has established itself as a serious competitor to Alibaba. After struggling with economic challenges and regulatory problems in recent years, the question is: can JD.com regain its former strength in 2025?

Overview: What does JD.com do?

JD.com is a Chinese company that sells a wide range of products through its platform, including electronics, household goods and groceries. It operates both traditional e-commerce retail and an extensive logistics network that enables it to deliver products faster and more efficiently.

✅ JD Mall: The main platform for B2C e-commerce, which has a large market share in China.

✅ JD Logistics: A leading logistics company that also operates for other brands and platforms.

✅ JD Health & JD Digits: Subsidiaries operating in the health and digital services sectors.

✅ Collaborations with Walmart and Google: Global partnerships to expand reach and innovative strength.

JD.com relies on an integrated business modelthat ranges from logistics and cloud services to digital healthcare solutions, which sets the company apart from other competitors.

Competition: Who are the competitors?

🔸 Alibaba $9988 (+6,06%) (Tmall, Taobao): The largest e-commerce competitor in China with a broader market coverage.

🔸 Pinduoduo $PDD (+5,26%)
: An emerging competitor that has established itself through group buying and low prices.

🔸 Amazon $AMZN (-2,39%)
: Even though Amazon is less dominant in China, it still has a presence in the international market, especially in cloud services.

🔸 Meituan $3690 (+0,8%)
: Another player in online retail and on-demand services, especially in food delivery.

JD.com has the advantage that it has a strong logistics network and a good B2B business However, it continues to be burdened by competition and regulatory challenges in China.

Opportunities: Why could JD.com make a comeback in 2025?

✅ Strong growth in logistics and cloud: JD Logistics and JD Cloud offer promising growth opportunities, especially in international business.

✅ Expansion into rural areas: JD.com has a strong presence in rural areas of China and could benefit from broader urbanization and increasing demand.

✅ Resurgent e-commerce market: Despite economic uncertainties, the Chinese e-commerce market is expected to grow in the long term - JD.com could benefit greatly from this.

✅ Innovations in FinTech and healthcare: JD.com has made great strides in FinTech and digital health solutions in recent years. These sectors could provide stable revenues in the future.

✅ Reduced regulatory uncertainty: After years of regulatory challenges, the situation in China could stabilize, making the market attractive for JD.com again.

Risks: What could continue to weigh on JD.com?

⚠️ Regulatory uncertainties: The Chinese state still retains significant influence over the market, and new regulations could weigh on JD.com.

⚠️ Competitive pressure from Alibaba & Pinduoduo: Strong competition from Alibaba and Pinduoduo remains a major challenge.

⚠️ Weak consumption in China: Weak economic recovery and falling consumer spending in China could slow growth.

⚠️ Dependence on B2B: JD.com generates a large proportion of its sales in the B2B sector. A slowdown in this market could affect growth targets.

⚠️ Geopolitical risks: Tensions between China and the West could have a negative impact on business activities, particularly in international trade and cloud services.

Conclusion: turnaround opportunity or value trap?

JD.com has the potential to benefit from the growth areas of logistics, cloud and FinTech in 2025. The company has been through tough times in recent years, but the fundamentals remain strong. If JD.com can maintain its market position in China and successfully expand into new business areas, it could make a remarkable comeback.

What do you think? Can JD.com take off again in 2025 or will it remain under pressure? 🚀

Wayfair ($W) (-8,73%) was a clear winner in e-commerce during the pandemic, but experienced a drastic crash afterwards. Now that the market has stabilized, investors are asking themselves: Is Wayfair ripe for a comeback or will the company remain under pressure?

Overview: What does Wayfair do?

Wayfair is one of the world's largest online retailers for furniture and home accessories. The company operates an asset-light model, which means that it does not produce its own furniture, but brokers products via a broad network of manufacturers and suppliers.

✅ Wayfair.com: Main platform for online furniture retail in the USA, Canada and Europe.

✅ Wayfair Professional: B2B platform for companies and interior designers.

✅ Perigold, AllModern, Birch Lane and Joss & Main: Other brands covering different design styles.

Wayfair relies heavily on data analysis and AIto understand buying behavior and optimize the supply chain.

Competition: Who are the competitors?

🔸 Amazon ($AMZN) (-2,39%) & Walmart ($WMT) (-2,31%) - Huge competition in online retail, which also offer furniture.

🔸 IKEA - The stationary furniture giant that is constantly expanding its online presence.

🔸 Home Depot ($HD) (-2,25%) & Lowe's ($LOW) (-2,87%) - Important competitors in the Home & Living segment.

🔸 Etsy ($ETSY) (-0,39%) & smaller specialty retailers - Competition from individual furniture and decoration suppliers.

Wayfair has the advantage of being a pure online specialist specialist for furniture, but has to hold its own against financially strong rivals.

Opportunities: Why could Wayfair make a comeback?

✅ Efficiency gains: Wayfair has worked hard on its cost structure and reduced staff in recent quarters.

✅ Stabilization of demand: After the extreme boom in 2020-2021 and the decline in 2022-2023, the market could now normalize.

✅ Improved consumer climate: Falling inflation and potential interest rate cuts could boost purchasing power.

✅ Improved margins: The company has recently achieved higher gross margins, which indicates better cost control.

✅ Expansion of B2B business: Wayfair Professional continues to grow and could be a stable revenue generator in the long term.

Risks: What could continue to weigh on Wayfair? ⚠️

⚠️ High competitive pressure: Amazon, IKEA and Walmart are strong opponents with better supply chains.

⚠️ Dependence on macro factors: High interest rates and weak consumer sentiment could delay the recovery.

⚠️ Profitability remains fragile: Wayfair has made losses in the past and needs to show it can sustain profits.

⚠️ Logistics and storage costs: Despite efficiency gains, shipping bulky furniture remains a challenge.

⚠️ Customer loyalty: Unlike Apple or Tesla, customers have little loyalty to Wayfair - many simply compare prices with the competition.

Conclusion: turnaround opportunity or value trap?

Wayfair could be one of the most exciting turnaround candidates in 2025. The company has worked hard on its cost structure and could benefit from a recovery in consumer sentiment. However, competition remains intense and it is not yet certain whether Wayfair will become sustainably profitable.

What do you think? Does Wayfair have the potential for a strong recovery or will the share remain a shaky candidate? 🚀

Sea Limited ($SE (-2,53%) ) is a versatile company from Singapore that has developed a super app has built a strong ecosystem of e-commerce, gaming and FinTech. After explosive growth in recent years and a subsequent fall in the share price, many investors are asking themselves: Does Sea Ltd still have potential for a turnaround?

Overview: What does Sea Limited do?

Sea Limited is active in three core areas:

✅ Shopee (e-commerce): One of the largest e-commerce platforms in Southeast Asia, Taiwan and Brazil. Competition for Alibaba (Lazada), Tokopedia and MercadoLibre.

✅ Garena (Gaming): Developer of the globally successful mobile game Free Fire. Formerly the engine of growth, now weakening.

✅ SeaMoney (FinTech): Digital financial services, including lending and payment processing, strongly integrated into Shopee.

Sea Limited pursues a vertical business model where the different divisions reinforce each other - Shopee drives SeaMoney, while Garena used to deliver high profits to fund expansions.

Competition: Who are the competitors?

🔸 Alibaba $BABA (+5,86%)
(Lazada.) & Tokopedia - Strong e-commerce competition in Southeast Asia.

🔸 Amazon
$AMZN (-2,39%) - A growing threat, especially in markets such as Brazil

🔸 MercadoLibre $MELI (-4,31%) - The market leader in Latin America and a direct opponent in Brazil.

🔸 Tencent $TCEHY (+2,81%)
& NetEase
$NTES (+2,07%) - Strong competition in the gaming segment, especially in China.

🔸 Revolut, Grab $GRAB (+1,66%)
& Ant Group - FinTech competitors that offer similar services.

Opportunities: Why could Sea Limited be a comeback story?

✅ E-commerce remains strong: Shopee remains the market leader in several Asian countries. Despite economic uncertainties, online retail is growing in the long term.

✅ SeaMoney as a silent winner: The FinTech segment is growing steadily and can become a new source of income for Sea Ltd through digital payment services and loans.

✅ Profitability focus: After years of aggressive growth with high losses, the company is now focusing more on cost reductions and profitability - a sign that Sea Ltd wants to operate more sustainably.

✅ Expansion in Latin America: Shopee has grown particularly strongly in Brazil. If the company can establish itself there permanently, that would be a big plus.

✅ Gaming as untapped potential: If Free Fire stabilizes or Sea Ltd develops new successful games, Garena could become a growth driver again.

Risks: What could continue to weigh on Sea Limited?

⚠️ Declining gaming sales:
Free Fire was once the biggest profit generator, but user numbers are falling. Without a new hit, Garena could continue to weaken.

⚠️ Competitive pressure in e-commerce: Alibaba, Tokopedia and Amazon are putting massive pressure on Sea Ltd in Asia and Latin America. Defending market share will be expensive.

⚠️ Regulatory risks: In Asia in particular, there are always new regulations for FinTechs and online retailers that could slow down Sea Ltd's growth.

⚠️ Macroeconomic uncertainties: Rising interest rates and weak consumer behavior could have a negative impact on business - both in e-commerce and in the lending business.

⚠️ Cost cutting vs. growth: Sea Ltd is trying to become more profitable while expanding into new markets. The balancing act between growth and cost control is not easy.

Conclusion: turnaround opportunity or value trap?

Sea Limited is still one of the most exciting technology companies in Asia. The focus on profitability is positive, but success depends heavily on whether the company can stabilize its gaming division and defend Shopee against the competition.

Those who believe in the long-term potential of the Southeast Asian market and are prepared to accept short-term volatility could find a promising turnaround in Sea Ltd could be a promising turnaround opportunity.

What do you think? Is Sea Limited on its way to a comeback or is it still a risky bet?🚀

After some back and forth, I think I have now found what I want to save for the long term and securely.

10 euros go into Bitcoin every Monday

$IWDA (-1,03%) 100 per month

$TDIV (-0,63%) 100 a month

$O (+1,37%) also 100 per month

$SGBS (+0,3%) 100 per month

$NU (-11,11%) is a test balloon with a small position. Let's see what happens.

The aim is to generate both growth and cash flow in the long term (10 years).

The savings rate of $O (+1,37%) is increased monthly by the dividend. The 1/4 annual distributions from the $TDIV (-0,63%) are also increased by the dividend in the savings plan.

Probably very boring, but I think that's ok for me.

I still have 300 euros a month at my disposal that can be invested if there is a dip.

Should the $SGBS (+0,3%) remain tax-free permanently after a holding period of one year, you could switch 1 year before retirement to be able to withdraw tax-free.

Could

have $HIMS (-26,15%) and $AMZN (-2,39%) and $NVDA (-3,63%) sold too early, but still made a profit.

Since individual stocks are somehow too stressful for me, and I don't have any nerves when things go down, I stick with ETFs.

Have a nice weekend Carsten

PS the return figures for Getquin are somehow no longer correct since I switched to TR. :-(

Last week, Saturday's episode of "All About Stocks" [1] featured an excerpt from the study "Do Stocks Outperform Treasury Bills?" [2], which sounded quite interesting and the contents of which I subsequently read again in more detail.

The essence of the study is that only a small proportion of companies are responsible for the majority of returns.

It therefore serves as a reminder that it is probably the best choice for the "average investor" to invest in a well-diversified ETF.

Here is a brief presentation of the results.

Hendrik Bessembinder from the W.P. Carey School of Business at Arizona State University has investigated which stocks really drive the market in the long term.

According to the study, since 1926 only 4% of all stocks have generated the total net profit of the US stock market [2].

The other 96% of stocks in total have only generated as much return as safe one-month US government bonds or even less [2]. The average monthly return here was 0.37% (which is roughly equivalent to an annual return of 4.53% when compound interest is taken into account).

Almost more interesting is the following:

The top 50 companies were responsible for 39.29% of the total value creation of the US stock market and.

... the top 90 stocks (only 0.36% of all companies) even generated more than 50% of the total market profit [2].

The 4% mentioned still represent just under 1,092 of over 25,000 companies. It doesn't seem so unrealistic to find them.

The only problem is:

The best stocks are usually only recognized in retrospect

• Apple, Mircosoft and Amazon were still small, unknown companies 30 years ago.
• Many investors would have bet on "safe" large companies back then, but some of them (e.g. Kodak or Nokia) are no longer among the top performers today.
• We will only know today's 4% winners in the future.

Even professionals often fail

• Active fund managers try to do just that: find the best stocks and avoid the bad ones.
• But most fund managers do not beat the market over the long term.

Timing is often extremely difficult

• Many of the best stocks looked like losers in the meantime.
• For example, the Amazon share fell $AMZN (-2,39%) after the dotcom crash by almost - 90 %, even after mid-2021 Amazon lost almost - 50 %, would you have held it?

More than half of all stocks have even generated negative returns over their entire lifetime [2].

That means: The average stock return we all know is not generated by the "broad" market, but only by these 4% of stocks.

Further results of the study:

Value creation on the stock market is extremely unevenly distributed.

• ExxonMobil $XOM (-0,73%) alone generated the most shareholder value creation with 1 trillion dollars and was responsible for 2.88% of the total market development from 1926 to 2016 [2].
• Apple $AAPL (+0,26%) ($745.7 billion), Microsoft $MSFT (-1,57%) ($629.8 billion), General Electric $GE (-4,03%) ($608.1 billion) and IBM $IBM (-0,47%) ($520.2 billion) are among the top 5 companies that together account for over 10% of total stock market value creation [2].

The question now for us as investors is:

Do I really think I can buy these 4% winning stocks early can find them early?

... and at the same time can I at least stay away from the biggest losers from the remaining 96%?

... or do I prefer to stick with John Bogle the founder of Vanguard, who gave the following famous quote:

🧠 "Don't try to find the needle in the haystack. Just buy the whole haystack."

The haystack is in that sense an ETF:

• ETFs are a self-optimizing system in which well-performing sectors and companies are overweighted and weak companies gradually lose importance.
• You don't have to find the 4% yourself, the ETF does it for you.

Conclusion

Yes, it is theoretically possible to find the 4% yourself, to time it correctly and to hold it, as well as to stay away from the biggest losers of the 96% in the long term.

The question is: do you want to bet your portfolio on it, or would you rather make sure you automatically profit from the 4%.

💡For most investors, a simple ETF investment as a "core" is therefore probably the best choice.

Thank you for reading 🤝

__________

P.S. The study was published in 2017 and last revised in 2018.

With regard to a more recent analysis, which refers specifically to the last few years, the study does not contain separate results for shorter periods. However, it does mention that this effect has been even more pronounced in recent decades, particularly since the 1980s. To get a detailed current analysis, one would have to search more recent research.

__________

Source:

[1] https://open.spotify.com/episode/7ik1W0e9zq7TBYacPW0eVl?si=Sw2Mu0XSSH2SQFp5cHtpLQ

[2]

published 01/2017, revised 06/2018
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447&utm_source=chatgpt.com

#Aktien
#ETF
#StockPicking

I have made changes to my stock portfolio, on the one hand after further analyzing my positions. I appreciate the feedback 🫶

❌ I have decided to sell:

$WMT (-2,31%)
$ITX (-2,84%) partially at 40%.

$AMZN (-2,39%)
$BMW (-0,12%) at 100%.

The main reasons are in the case of the first 2 (Inditex y Walmart) make up too large a part of my portfolio and I think there are better investments to make at this time, besides both are at or very close to their historical highs and after analyzing their fundamentals I have noticed that they are somewhat overvalued🔝.

(They are still part of my portfolio and in case of corrections I will always be able to repurchase)

In the case of Amazon after analyzing it has had a great growth but in numbers it seems too expensive 🫰

(I have preferred to ensure profits although I do not rule out a future purchase at a fairer price).

On the other hand BMW was not as good an idea as I had in my head at the beginning and after a 6% rise in a very short time I have decided to take it out of the way ⏱️

(I think there are much better investments out there and besides it is a sector in which I don't see good forecasts for the long term 🤔)

✅ On the other hand I have decided to buy:

$META (-1,11%)
$DHER (-3,81%)
$GOOGL (-2,28%)

I personally believe that Meta is a company with a long way to go and despite being at historical highs its fundamentals are quite good compared to other companies of its size 👏👌.

As for Google after an 11% drop from highs I have seen it as a good opportunity to buy back at lower prices 🤑

Finally there is my bet with Delivery Hero which has not yet generated profits but is a company that I consider undervalued compared to what it could be worth in the future and is also a good company to diversify in European and emerging markets 🇪🇺🇨🇳