The record stock market has been fueled by temporary booms in microchip prices and oil prices, but investors are left wondering if these stocks offer better value now.
Valuations, measured as the price-to-earnings or PE ratio, have plunged while stocks rose to a record high this week, a phenomenon unprecedented in data back to 1985.
The reason for the recent drop in valuation is that companies' expected earnings have soared, while stock prices have made only small gains.
The question for investors is whether the stocks that have benefited from these one-off boosts really offer better value now.
AI stocks, which have soared in the hope of something great, are now proving their ability to grow into their valuations, but growth hopes are still far too high, and data-center projections are way ahead of reality.
Oil stocks have also benefited from the war in Iran, but a temporary boost to earnings is welcome for shareholders, but what investors really want is a rise in profit every year.
