How to Invest in the Most Expensive Stock Market in History

The S&P 500 is at all-time highs.

Unfortunately, that doesn’t mean that the stocks you own are.  

Investment management firm Oppenheimer & Co. ran the numbers. It found that the number of stocks on the New York Stock Exchange (NYSE) hitting new highs outnumbers stocks hitting new lows by just 88 stocks. 

Given that there are more than 2,000 stocks traded on the NYSE, that’s a small number. 

It suggests that the market rally may be fizzling out. 

Using data going back to 1972, a difference of 100 or less has been followed by subpar returns for the S&P 500 over the following 12 months.

As I keep saying, this is a complacent market priced for perfection. 

The S&P 500 trades at 28 times reported earnings. Investors are paying $28 for every $1 of earnings the S&P 500 companies have booked over the past 12 months.

That puts it between the 90th and 95th percentile of most expensive markets in history. By one notable measure – the price-to-sales ratio – the S&P 500 is the most expensive it has ever been.

It doesn’t mean that a crash is imminent or that stocks are guaranteed to fall. 

It means caution is warranted. 

Especially when it comes to the mega cap tech companies that dominated the stock market.

Eye-Watering Valuations

Since the bottom in April, the Magnificent Seven – Amazon, Apple, Alphabet, Microsoft, Meta, Nvidia, and Tesla – have returned about 36%. That compares with a return of 25% for the S&P 500.

It’s the same story we’ve heard for years. 

A small core of stocks is pulling the market higher. Investors are running with it because it seems to be working, and they have nowhere else to go. 

But the result is some of the most expensive valuations we’ve ever seen for mature, large-cap companies. Take a look at the pricing of the Mag 7 below.

Valuations of Mag 7

These are some of the finest companies in the history of capitalism. All are major innovators. All should trade at a healthy premium to the rest of the stock market. 

But does it make sense that Microsoft is trading for 13.8 times sales? 

The average for the S&P 500 over the past 20 years is 1.7 times sales. Should a mature company of Microsoft’s size be eight times more expensive than the long-term market average? 

Or what about Google parent Alphabet?

Its primary source of revenue is selling ads to people using Google’s search engine. But AI chatbots such as ChatGPT are now disrupting that business. And people are using them to search the web instead of going to Google.

Does it make sense that Alphabet trades for double the S&P 500’s price-to-sales ratio?

I’ll answer for you. No… it doesn’t. Not by a country mile. 

Yet investors looking to profit from the AI revolution underway are buying these behemoths hand over fist. They’re not bad investments. But they’re not going to deliver the returns AI investors are hoping for.

The good news is there are alternatives to buying these richly valued behemoths, particularly when looking to invest in AI.

Turn Your Attention to “Pocket Change” Stocks

Our cofounder and legendary growth stock investor Louis Navellier is hunting for profits in what he calls “pocket change” stocks.

These are the kinds of stocks he covers at his Breakthrough Stocks advisory, with market values of between about $300 million and $2 billion.

They’re small, under-owned, and under the radar. As a result, these are stocks that could go up 1,000%, 5,000%, even 10,000% as investors pile in.

Now, there aren’t many AI stocks this small. Most of them are mega caps – think Microsoft, Google, and Meta. But there are tiny companies that make materials that are critical to the AI build out. 

The companies Louis is targeting right now have three key characteristics. They must be…

1. Critical to the AI buildout
2. Positioned ahead of a big demand boom
3. Blessed by the government

And there’s only one tiny subsector of the market that ticks all three boxes. Louis says…

It’s a niche most folks don’t even associate with AI. But without it, the buildout of AI can’t happen.

Like the energy sector, this niche is critical to America’s AI future… and even its national security.

That’s why, just five days after he entered the White House, President Trump signed an “AI Executive Order” to protect and promote it.

And he’s about to grant “priority status” to a handful of U.S.-based companies based on this order in a major AI announcement just two weeks from today – on July 22.

Louis believes this is another rare opportunity for you to turn a modest stake into as much as a six-figure payout from the AI revolution.

And he knows a thing or two about that.

Louis recommended AI chipmaker Nvidia in 2016 when it was trading at a split-adjusted price of about one dollar.

Today, its share price is 10,000% higher.

Today Nvidia carries a $3.9 trillion market capitalization (the sum value of its outstanding shares). 

Really moving the needle on your wealth by buying a company that size is a pipedream.

Nvidia may continue to reward investors. But its explosive growth phase is in the rear-view mirror. 

For truly explosive AI growth, you need to focus on the kind of small stocks Louis has in his sights.

You can find out all the details from Louis in the special online briefing he’s put together about it called Trump’s AI Day. (By clicking the link, you’ll RSVP automatically to this event.)

It will air tonight, July 9 at 8 p.m. Eastern. If you’re looking for new ways to profit from AI that aren’t the same thing everything else is doing, you’re going to get a lot out of it.

During his briefing, Louis will…

• Explain why President Trump set a critical AI deadline for July 22… and how it could trigger a boom in a tiny niche of “forgotten” stocks that accounts for less than 2% of the market.
• Reveal how the last time we had a boom in this overlooked sector, investors had a chance to get rich with gains of 3,768%, 4,894% and even 5,059%.
• Discuss details of a new model portfolio with his top five “pocket change” stocks for this new AI boom.

And as a thank you for tuning in, he’ll also reveal the name and ticker symbol of one of the companies most likely to benefit from Trump’s July 22 action to all attendees.

Here’s that link again to instantly secure your spot for Trump’s AI Day briefing.

To life, liberty, and the pursuit of wealth.