The Bull market that started in 2022 after the Fed started raising rates, has reached 130 weeks, and 59% return in real terms. When compared with prior cycles, it may look as if it has room to continue growing, but when considering the CAPE (Cyclically Adjusted Price Earnings ratio), pictured as the size of the dots in the graph, you will notice that they are bigger than prior cycles at this point, and close of above to historical maximums for valuations. It is true that this time, due to the market concentration in a few stocks, the average valuation may not be as representative of the overall market as it has been before, but it’s nonetheless stretched. It’s also important to note that this bull market is at a moment in its life where prior cycles have forked, and most of them have fall below the mid-line. Corporate earnings will become increasingly important to support this market.
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