“Bull markets,” said legendary investor John Templeton, “are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.” The equity bull market started in October 2022 and is well under way, although it is further advanced in the US. Market sages are in denial, having warned of a recession that would dent stocks, but it has failed to appear. Ed Yardeni of Yardeni Research likens them to Vladimir and Estragon, the characters “waiting for Godot” in Samuel Beckett’s play. Godot never turns up.
The sceptics point to the narrow base of the bull market. The “MegaCap-8” of the US market (Apple, Amazon, Alphabet, Microsoft, Meta, Nvidia, Netflix and Tesla) fell by 41% in 2022, but have since rebounded by 64%, so their share of the S&P 500 index has risen from 19% to 27%. The S&P 500 has climbed by 17% this year, but only by 5.5% without the MegaCap-8.
The forward earnings multiple of the MegaCap-8 has risen to 31 times, still short of the 38 reached
