The UNTHINKABLE is about to happen to Stocks (Get READY!)
Overall Thesis
S&P forward PE of 20 is not-cheap-not-expensive (right at the 10-year average). Individual tech names are at deep discounts though — NVDA at 15× 2027 FWD PE vs 64× 5-yr avg, MSFT -26% YTD, TSLA -21% YTD, etc. This is where 'extreme fear' opportunities are made; DCA slow, don't go all-in, keep dry powder for a potential further 30% drawdown if Bab-el-Mandeb closes. Seven oversold 'elite companies at a discount': MSFT, AMZN, GOOG, NVDA, TSLA, PLTR, CRWD.
Narratives
Tesla is one of the seven 'oversold elite companies at a discount' at -21% YTD. Framed as a buy opportunity on DCA dips — 'the leader in robotics and AI'. Not a call to go all-in; stay selective, slow, and keep dry powder for a potential further drawdown.
Key Arguments
- TSLA -21% YTD — deep drawdown territory for a megacap
- 'Leader in robotics and AI' narrative intact (Optimus, FSD)
- Tech is historically the biggest drawdown loser but delivers the biggest rebound when markets turn
- Double-down DCA is the system; don't time the bottom, average in on dips
Predictions (1)
SPY FWD PE at 20 is right on the 5-year and 10-year averages. Historical data says at this PE bucket, average annual returns over the next 3 years are 5-15% — not bottom-territory (that would be PE 11-13) and not bubble-territory (that would be PE 24+). Extreme-fear sentiment reading creates opportunity in beaten-down names even though the index itself isn't obviously mispriced.
Key Arguments
- Forward PE 20 = middle of the historical return band (5-15% annualized)
- 10-year average PE is 19 — SPY is roughly fair-valued
- CNN Fear & Greed at single digits = 'extreme fear' → where opportunities are made
- Average bull market: 5 years, +177%; current cycle not yet at historical average
Hedges & Caveats
- Iran / Houthis could close Bab-el-Mandeb, blocking 40% of global oil trade — if that happens, expect a market meltdown
- Don't go all-in — you don't know where the bottom is
- SPY overall is average-priced, not cheap-cheap