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?

Can you survive a 70% drawdown in $NVDA (-3,63%)
$PLTR (-3,33%)
$MSFT (-1,57%) ?

or 40% on the S&P?

Have you ever wondered where the Gates Foundation invests its money? In the fourth quarter of 2024, the foundation has impressive holdings in its portfolio.

The foundation manages assets of around 42.02 billion US dollars and is one of the largest private foundations in the world. The main stocks include Berkshire Hathaway , Canadian National Railway and Microsoft .

Here is an overview of some of the largest holdings:

- Microsoft: USD 11.99 billion (28.54%) $MSFT (-1,57%)

- Berkshire Hathaway: USD 8.91 billion (21.20%) $BRK.A (+0,95%)
$BRK.B (-0,13%)

- Waste Management: USD 6.5 billion (15.48%) $WM (-0,95%)

- Canadian National Railway: USD 5.57 billion (13.24%) $CNR (+0,55%)

- Caterpillar: USD 2.67 billion (6.35%) $CAT (-2,26%)

These investments show that the Gates Foundation invests in both traditional and future-oriented companies.

What do you think of the Gates Foundation's investment decisions? Do you think they are backing the right horses? 📈

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? 📈

Today I have a Microsoft share today, as the company is particularly interesting for me at the moment. 💡

With the recent presentation of their quantum computer they are taking another important step into the future of technology! 💻✨

I'm excited to see how it all develops.

What do you think about Microsoft's future? 👇

Microsoft $MSFT (-1,57%) has unveiled a new chip that could revolutionize the development of quantum computers. This chip is based on the first topo conductor that can generate a new state of matter. This could make it possible to develop quantum computers that are ready for use in the next few years instead of decades. 📈

The technology promises to create quantum systems that are smaller than the palm of your hand and offer greater reliability. A professor at the University of Surrey has recognized that Microsoft could be serious competition in the race for reliable quantum computers.

But despite these promising advances, there are still many challenges to overcome. What do you think of these developments? Do you think quantum computers will soon be part of our everyday lives? Let's discuss it!

Etsy falls after sales miss expectations + Microsoft with breakthrough in quantum computing + Mercedes-Benz with profit slump due to China + Airbus sets itself significantly higher targets for 2025 + Knorr-Bremse announces higher dividend

Etsy $ETSY (-0,39%)falls after Q4 revenue misses expectations

• Shares of Etsy (ETSY) fell more than 10% on Wednesday after the company's fourth-quarter revenue fell short of analysts' expectations.
• The company reported Q4 net income of $1.03 per diluted share, compared to $0.62 a year earlier.
• Analysts polled by FactSet had expected $0.93.
• Revenue for the quarter ended Dec. 31 was $852.2 million, compared with $842.3 million a year earlier.Analysts surveyed by FactSet had expected $861.8 million.
• The company said it expects gross merchandise sales growth in the first quarter to decline at a similar rate to the fourth quarter of 2024, which saw a 6.8% decline.
• FactSet analysts expect Q1 gross revenue of $2.90 billion.

Microsoft $MSFT (-1,57%)with breakthrough in quantum computing with new Majorana-1 chip

• Microsoft has spent 17 years researching a new material and a new architecture for quantum computers.
• Now the breakthrough has been achieved with the new Majorana 1 chip, as The Verge reports.

Mercedes-Benz $MBG (-1,31%)suffers significant drop in profits due to weakness in China

• The car manufacturer Mercedes-Benz suffered a significant drop in profits last year, mainly due to poor business in China.
• Consolidated earnings fell by a good 28 percent year-on-year to 10.4 billion euros, as the DAX-listed company announced on Thursday.
• The Stuttgart-based company had already had to drastically cut its profit expectations in September.
• The dividend is to be reduced by one euro to 4.30 euros per share.
• Mercedes also intends to launch a further share buyback of up to 5 billion euros, subject to approval by the Annual General Meeting.
• In China, the most important single market, wealthy customers are buying less expensive Mercedes cars, which is causing the high profitability of previous years to dwindle.
• In 2024, only 8.1 percent of sales before interest, taxes and special items remained as operating profit in the passenger car business across the Group.
• This was slightly less than experts had expected.
• A year earlier, it had been 12.6 percent, and even higher in the two previous years. Turnover fell by 4.5 percent to 145.6 billion euros for the year as a whole.
• Earnings before interest and taxes fell by almost a third to 13.6 billion euros, which was slightly better than experts had feared.

Airbus $AIR (-3,2%)is aiming much higher for 2025 - profit forecast disappointed

• After a bumpy year, the world's largest aircraft manufacturer Airbus is aiming for higher deliveries and profits in 2025.
• CEO Guillaume Faury plans to deliver around 820 passenger jets in the current year, more than 50 more than in the previous year, as the DAX-listed company announced in Toulouse on Thursday.
• Operating profit before special items (adjusted EBIT) is expected to climb to around 7 billion euros after falling to less than 5.4 billion euros in 2024.
• Analysts had expected a little more, especially for 2025.
• However, shareholders can expect a higher dividend for the past year: Airbus intends to pay out 3 euros per share, 1 euro of which will be a special dividend.
• For 2023, the Group had paid out 2.80 euros per share - and there was also a special dividend of one euro at that time.
• In the past year, the manufacturer increased its turnover by six percent to 69 billion euros.
• However, the adjusted operating profit fell by nine percent to 5.4 billion euros.
• On the one hand, Airbus delivered 766 fewer passenger jets than originally expected due to a shortage of components.
• On the other hand, burdens in the space business and the A400M military transporter weighed on the result.
• The surplus grew again by twelve percent to 4.2 billion euros, after suffering from unfavorable exchange rates in the previous year.
• While Faury is sticking to its latest expansion plans for passenger jet production, buyers of the new A350F freighter will have to wait longer for their aircraft.
• Instead of 2026, the first aircraft is now not scheduled to enter service until the second half of 2027.

Knorr-Bremse $KBX (+0,71%)wants to grow further and holds out the prospect of a higher dividend

• Truck and train brake manufacturer Knorr-Bremse is aiming for further growth in the current year.
• The company announced on Thursday in Munich when presenting its figures for 2024 that sales are set to increase to between EUR 8.1 and 8.4 billion.
• The management expects the adjusted margin on earnings before interest and taxes (EBIT) to be between 12.5 and 13.5 percent in 2025. At almost 7.9 billion euros, revenue in the past financial year was roughly on a par with the previous year.
• Declines in the commercial vehicle business were offset by growth in the rail division.
• Adjusted EBIT increased by 8.2 percent to EUR 966.4 million, while the corresponding margin improved by one percentage point to 12.3 percent.
• Knorr-Bremse benefited from its ongoing restructuring program.
• The company announced an increased dividend for 2024.
• Most recently, Knorr-Bremse had held out the prospect of at least a stable payment - compared to EUR 1.64 per share most recently.

Thursday: Stock market dates, economic data, quarterly figures

• ex-dividend of individual stocks
• BP USD 0.08
• Microsoft 0.83 USD
• Imperial Brands GBP 0.54
• Applied Materials USD 0.40
• AstraZeneca 21.00 GBX
• easyJet 0.12 GBP
• GSK 0.16 GBP

• Quarterly figures / company dates USA / Asia
• 05:00 Lenovo quarterly figures
• 13:00 Walmart quarterly figures
• 13:30 Alibaba quarterly figures
• 14:00 Walmart analyst conference
• 17:00 Visa Investor Day
• 22:00 Booking Holdings quarterly figures

• Quarterly figures / Company dates Europe
• 07:00 Mercedes-Benz | Airbus | Zurich Insurance | Knorr-Bremse | Krones | Renault Annual results
• 07:30 Schneider Electric | Indus Holding Annual results
• 08:00 Anglo American | Repsol | Lloyds Banking Annual Results | Mercedes-Benz Analyst and Press Conference
• 09:00 Knorr-Bremse BI-PK
• 09:15 Airbus PK
• 10:00 Infineon | Siemens Energy AGM
• 13:00 Zurich Insurance Analyst Conference
• 14:30 Krones conference call
• 18:00 Leonardo | Imerys quarterly figures

Economic data

08:00 DE: Producer prices January FORECAST: +0.5% yoy/+1.2% yoy previously: -0.1% yoy/+0.8% yoy | Turnover in the hospitality industry December and year 2024

08:00 CH: Trade balance January

12:00 EU: ECB balance sheet 2024

14:30 US: Initial jobless claims (week) previous week FORECAST: 215,000 Previous: 213,000

14:30 US: Philadelphia Fed Index February FORECAST: 13.2 PREVIOUS: 44.3

15:30 US: Fed Chicago President Goolsbee, speech at "Chicagoland Chamber Mid-Market" event, Chicago

16:00 EU: Eurozone Consumer Confidence Index (flash estimate) February FORECAST: -13.9 previous: -14.2

16:00 US: Leading Indicators Index January FORECAST: -0.2% yoy previous: -0.1% yoy

$MSFT (-1,57%) discovered new state of matter for quantum computing - for the translation and summary I used chatgpt, which unfortunately did not know the NYT article yet, but 3 other sources like the Financial Times. I hope you can read the NYT article I linked as a gift, otherwise parts are copied out below.

I appreciate any advice on how to include a photo in the post next time.

Reading time: 5 minutes

********

Today, the New York Times reported on a groundbreaking development by Microsoft in the field of quantum computing. The company unveiled the "Majorana 1" chip, which is based on a new type of material called a "topo conductor". This material enables the creation of topological qubits that are more stable and less error-prone than conventional qubits. Remarkably, this material is a new phase of matter that is neither solid, liquid nor gaseous and whose existence was previously considered impossible by many experts.

Topological qubits store quantum information in the ends of a superconducting nanowire and are less susceptible to interference. Microsoft's approach uses Majorana fermions, theoretical particles that are their own antiparticles, to realize these qubits. After 17 years of research, the company has succeeded in developing the "Majorana 1" processor based on this architecture. This chip could accommodate up to one million qubits on a single palm-sized chip, significantly increasing computing power for complex simulations and real-world problems in fields such as medicine and materials science.

The development of the "Topoleiter" and the "Majorana 1" chip could significantly accelerate the realization of practical quantum computers. Microsoft has been selected by the Defense Advanced Research Projects Agency (DARPA) to develop a fault-tolerant prototype quantum computer, suggesting that the company's scalable quantum computing architecture could become a reality in the near future.

These advances position Microsoft as a leader in the race to develop functional quantum computers that have the potential to solve complex industrial and societal problems, such as cracking encryption codes.

What does this mean for Bitcoin? What do you think?

@stefan_21

*********

Microsoft Says It Has Created a New State of Matter to Power Quantum Computers

Microsoft's new "topological qubit" is not based on a solid, liquid or gas. It is another phase of matter that many experts did not think was possible.

Anyone who has sat through a third-grade science class knows there are three primary states of matter: solid, liquid and gas.

Microsoft now says it has created a new state of matter in its quest to make a powerful machine, called a quantum computerthat could accelerate the development of everything from batteries to medicines to artificial intelligence.

On Wednesday, Microsoft's scientists said they had built what is known as a "topological qubit" based on this new phase of physical existence, which could be harnessed to solve mathematical, scientific and technological problems.

With the development, Microsoft is raising the stakes in what is set to be the next big technological contest, beyond today's race over artificial intelligence. Scientists have chased the dream of a quantum computer - a machine that could exploit the strange and exceedingly powerful behavior of subatomic particles or very cold objects - since the 1980s.

The push heated up in December when Google unveiled an experimental quantum computer that needed just five minutes to complete a calculation that most supercomputers could not finish in 10 septillion years - longer than the age of the known universe.

Microsoft's quantum technology could leapfrog the methods under development at Google. ..... The technology is not as volatile as other quantum technologies, the company said, making it easier to exploit its power.

Some question whether Microsoft has achieved this milestone, and many leading academics said quantum computers would not be fully realized for decades. But Microsoft's scientists said their methods would help them reach the finish line sooner. .....

.....

https://www.nytimes.com/2025/02/19/technology/microsoft-quantum-computing-topological-qubit.html?rsrc=ss&unlocked_article_code=1.yE4.Hpu4.pbV3Y9tbHCt_&smid=nytcore-ios-share&referringSource=articleShare

3 examples from my savings plan portfolio

Walmart
$WMT (-2,31%)

A boring dividend aristocrat, solid figures and slight growth. Clearly outperformed the S&P 500 last year.

Sprouts Farmers
$SFM (-12,04%)

Return of approx. 240% in one year. The figures and growth (approx. 10-15%) are decent, but the share price development is a bit insane compared to the growth 😂

Microsoft
$MSFT (-1,57%)

A very good growth stock that belongs in every portfolio, sales and profits are increasing quarter by quarter, but Microsoft didn't stand a chance against the S&P 500 last year and has only gone sideways so far