I look at markets mostly through yields, and I’m struggling to fully buy into this rally.
Indexes are near ATHs, but a lot of big names have been flat or drifting lower for weeks. At the same time, yields are still elevated, so it doesn’t really feel like conditions are getting easier.
A few things that stand out to me:
1. Strength feels narrow, not broad
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Earnings expectations seem ahead of actual earnings
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Volatility is very low despite obvious macro risks
Not trying to call a top or say “crash incoming.” I’m still mostly invested, just more cautious than usual and holding more cash than I normally would.
Is this just normal rotation under the surface?
Or are yields quietly signaling something equities are ignoring?
Does this rally feel healthy to you?
byu/Yield_Strategist instocks
Posted by Yield_Strategist
32 Comments
What rally?
The so-called “booming” economy is, in reality, almost entirely propped up by the Magnificent Seven. Everyone in the room already knows that.
You are just making it sound more intellectual.
It feels like a stock pickers market. There is some serious strength but it’s not an everything rally.
We’re in a bull run for 2-3 years so yes
What are those obvious macro risk that weren’t there 5, 10 or 15 years ago?
Short answer is no it doesn’t feel healthy. But I’m ok with a heavy correction and prepared to stick it out if I need to. DCA and smoke weed every day.
I don’t actually smoke weed, but you get it.
No complaints on my behalf
When the Feds cut near ath, stocks have never been lower a year later. I’ll take my chances 🤷♂️
I think we’re seeing massive changes in the markets as a new economy emerges.
While the usual stalwarts still hold firm, industries like AI, space, defense 2.0, bioscience and others are just starting to come into their own (some faster than others).
This is bringing in new capital, new challenges, and a lot of new opportunities.
It’s why someone holding a basket of high-beta space and defense 2.0 stock can have an awful week while someone else with a standard ETF can have a great one.
The only constant now is change.
What yields are elevated to you? Isnt the yield spread historically quite low.
Seems Greater Fools running the yard. That has never ended well.
Take it from a European. Us is outperformed by every single index if you account dollar devaluation. I am talking about everything btw. Korea Japan hai k kong Switzerland Uk EU even fucking maple syrup people stocks…
It feels healthy because the market has been consolidating since October, any confirmation of a direction with make it feel better. Also, the market is just gonna keep going up due to M2 expansion so it’s just a reality at this point.
There are a bunch of signs that point toward an imminent correction (combination of a recently reverted yield curve + low VIX, historically high CAPE ratio and Buffet index). But markets can stay irrational for a long time and timing the market is tough- so is “imminent” a matter of weeks-months or still years out?
My answer to the valuation anxieties has been to move most of the portfolio to cooler parts of the market- high dividend, international, etc- and to trade broad S&P exposure for reduced exposure to a “hedge” of handful of individual equities that are poised to do well if/as the AI bull run continues.
And to be honest, that positioning is ultimately more about self-managing my own FOMO to ensure that I don’t go all-in at the top of the market, panic sell as the expected correction materializes, or sit in cash and miss out on another year of gains because I’m a perma-bear.
Not really since May
Nothings been normal since the GFC when our financial administrators decided ZIRP was better than nukes or bio at tearing down the world. Paper wealth has never been more unmoored from economic reality, so it just chases the feel good stories. We are fucked.
Check JPM guide to the markets. Almost double the 30-yr avg PE, 12pts higher than 30-yr avg Schiller Cape PE, 1% less in the avg dividend yield for 30-yr avg….
S&P is due for a pullback
Buy and Stop Loss. I put Stops back in Yesterday
Market has mostly been going sideways since October (only been up 1.25% since).
Based on your criteria above, when in the last three years has it felt healthy?
Yes. Incoming for another two years too
Strength has been led by smalls
Corporate profits remain elevated
Volatility suppression and index support is structural
It won’t last forever but we need a new narrative to shift the sentiment. Jan opex could be a good time for a new narrative to build on new positioning though
the market is not doing well if we account for inflation
Market breadth is well within the bell curve, earning expectations are innocent until proven otherwise at this point and volatility is low. The biggest risk is multiple contraction
Much of this sub hasn’t liked this market/felt it was healthy for the last 9 months and 40% off the bottom.
I own things that are up 40-50%+ YTD and January isn’t half over. Healthy? No, but if I had continually questioned the market every step of the way as much as this sub has I would have sold everything a while ago.
If there are things that I like long-term and have a great cost basis in, trim a little, look for out of favor things but don’t sell winners completely. Dial down risk a little bit, dial up risk a little bit. Not saying this to OP, but too many people seem to one day randomly decide that the market is up too much and sell everything or sell at the wrong time (the apocalyptic sentiment on here at the bottom in April – which was a bit worse than the sentiment on here in March 2020.)
Much of the last 5 years hasn’t been “healthy” but it’s weird that nobody was questioning the market mooning in early 2021 when a lot of people were talking about full porting Ark funds on here. In 2025, it felt like there were multiple threads *every single day* questioning it.
There are a lot of things doing well this year but so much of this sub’s growth focus has become the Mag 7 (some of which haven’t even beaten Walmart over the last 5 years) and the MAGS etf is down YTD.
Also, for all the concern over geopolitics in this sub it’s odd that that doesn’t seem to extend to risk to the currency and going to cash while gold ramps higher and higher. For all the concern about world events, there’s still much more interest in default piling into Mag 7 then there is in gold/gold miners. One could have done better in boring/consistent medical distribution names like MCK over the last half decade than a number of Mag 7 names.
Nothing against OP and not trying to be harsh, but particularly in the last year or so it feels like this sub is largely either talk about the same set of stocks or why to be cautious about the market but with no imminent catalyst. Used to be a great place for idea generation years ago but now when you have a period like the bottom in April you get scolded for talking about wanting to buy anything.
Things have been ‘mostly’ pretty sideways for a while , no?
Are there others stuck on the “VOO and chill” train ?
Market doesn’t operate on “feel”
Have a look at the charts from the dotcom bust, broken out by sector. Tech flattened before crashing, but as it did so breadth improved and old economy stocks actually kept going up for a while after the tech crash.
Is a market only healthy when its below ATH? I dont understanding the Logic of thinking just because something has reached ATH its not healthy.
> Not trying to call a top or say “crash incoming.”
Doesn’t matter if you’re afraid to call it or not, there’s lots of other investors who are calling it. Plenty of research is available for any investor who cares enough to DYOR & DD.
The question is what are you going to do about it when you realize it’s more likely investors see poor returns over the next few years. So what now if the market is probably closer to a market peak than the market bottom?
> Or are yields quietly signaling something equities are ignoring?
Yes equity investors buying right now are ignoring what earning yields are signalling.
When the stock market index is priced for perfection, with no equity risk premium or margin for error, buyers are complacently assuming strong earnings growth for many years into the future. Either that or they don’t care about the risk of significant drawdown & risk of poor future returns. There’s always some passive investors who will buy at any price & get stuck holding bags for years.
Debasement trade. People are putting their excess fiat into assets of any kind, which are all seen as risk off relative to the dollar. It’s why precious metals and equities are both going up when typically they move in opposite directions. It’s why despite the US market being one of the worst performing of 2025, still ended up 17%.