To The Moon

Before I get to what I’m doing, let’s look at why I’m not particularly excited about this market overall. The P/E ratio of the $.SPX(.SPX)$ is higher than at any point outside of the 2000 dot com crash, the financial crisis, or COVID.

There are currently 16 stocks with a market cap of over $5 billion and a price-to-sales multiple over 30, including the most valuable company in the world.

$NVIDIA Corp(NVDA)$ $ARM Holdings Ltd(ARM)$ $Palantir Technologies Inc.(PLTR)$ $MicroStrategy(MSTR)$ $Texas Pacific Land(TPL)$ $Insmed(INSM)$ $Astera Labs, Inc.(ALAB)$ $Roivant Sciences Ltd.(ROIV)$ $Revolution Medicines, Inc.(RVMD)$ $MURANO GLOBAL INVESTMENTS LIMITED(MRNO)$ $Trump Media & Technology(DJT)$ $Cytokinetics(CYTK)$ $QXO Inc(QXO)$ $Avidity Biosciences, Inc.(RNA)$ $Crinetics Pharmaceuticals Inc.(CRNX)$ $AST SpaceMobile, Inc.(ASTS)$

And a dog coin that happens to have the same ticker as the proposed Department of Government Efficiency (DOGE) has increased in value by $30 billion since the election because…memes.

Logically, none of this makes sense.

Then I put how I invest, what I own, and the Asymmetric Universe of stocks I cover into perspective.

Perspective, Perspective, Perspective

One of the reasons I get uncomfortable in a rising market is stock gains are generally driven by multiple expansions (rising stock price and no change in the underlying business), not a business improvement.

Business growth and margin expansion are measurable and predictable. Multiples are not!

What I’m reminding myself this week is simple: Multiple expansion is one of the four reasons stocks go up and they’re a feature, not a bug, of Asymmetric Investing.

This week we were riding tailwinds. Valuation multiple tailwinds are part of an asymmetric thesis!

And those tailwinds aren’t anywhere near bubble territory for even the hottest Asymmetric Universe stocks.

On a portfolio-weighted basis, here are the valuation stats of the Asymmetric Portfolio:

• Price to Sales (forward): 3.65

• Forward P/E: 34.0

• 3-Year Revenue CAGR: 24.1%

So, the portfolio is trading for a slightly higher P/E multiple than the market average and is growing about 2.5x faster (S&P 500 revenue growth is about 10%).

With some perspective, maybe the stocks in the Asymmetric Portfolio aren’t overvalued after all.

What I’m Doing

Bringing this back to frameworks, I have 2 frameworks I’m leaning into this week.

1. Stay fully invested

2. Don’t sell

As this study from FactSet shows, missing just the top few days of returns can be costly to long-term returns. I’m not going to start timing the market now.

Why am I not selling winners or stocks that have popped? See the above returns AND that’s not how asymmetric returns are generated.

I need to frame this one:

I’ll be back tomorrow with some earnings takes after these massive moves. There are two double-digit moves higher on earnings today, so there will be lots to discuss.

Hopefully, this email helps you understand my mindset in this market. I’m cautious, but reminding myself of the frameworks that work for asymmetric investing. Trust the process.