Sep 8, 2026 · 47 min
Listen from 2:17
Listen at 2:17
Falling P/E ratios challenge the expensive-market narrative
Stocks Aren't as Expensive as You Think | WAYT?
The discussion tests whether rising prices signal a bubble or reflect stronger margins, earnings growth, and a broadening market.
- 1Falling forward P/E ratios complicate claims that U.S. stocks are broadly overvalued.
- 2Rising margins can make price-to-sales ratios look expensive even as earnings-based valuations improve.
- 3Apple weakness, SpaceX’s share unlock, and software’s slide against semiconductors reveal a market in rotation.
Don't miss
The mystery chart is revealed as software divided by semiconductors, capturing a major rotation in market leadership.
The brief
Michael Batnick, Sean Russo, and Matt Robinson examine whether U.S. stocks are truly expensive, weighing falling forward P/E ratios against elevated price-to-sales multiples.
The hosts debate whether recent earnings growth reflects durable investment and stronger margins or an unsustainable mix of spending, debt, and capital expenditure.
A warning about investing in familiar companies broadens into a history of bull markets, speculation, and fraud, including activity around IPOs, prediction markets, and sports betting.
Apple’s relative weakness becomes a case study in market broadening, while a possible foldable iPhone raises questions about innovation, nostalgia, and consumer fatigue.
The episode closes with SpaceX’s share unlock and a mystery chart showing software falling relative to semiconductors, underscoring how markets can rotate before explanations arrive.
What was said on this episode
25 statements · 8 positive · 11 negative · 1 mixed · 5 neutral
Only 27 S&P 500 stocks trade above a 40 forward P/E multiple.
“We have 27 stocks in the S&P 500, only 27 trading with a 4P greater than 40.”
Listen at 4:19
The market is unlikely to be a bubble given the low number of stocks above 40 forward P/E.
“How can you talk about... being in a bubble when you have the number of stocks with a 4p greater than 40 back to the levels that we saw in March 2020”
Listen at 5:13
Most stocks across sectors trade at 10–20 times forward earnings, not extreme valuations.
“on average, across all sectors, 52% of stocks are falling within... within the 10 to 20 bucket in 4p. So that's not crazy expensive.”
Listen at 6:33
The market’s trailing price-to-sales ratio is at an all-time high.
“This is the trailing price of sales. And it's at all-time highs.”
Listen at 7:55
Higher profit margins raise price-to-sales multiples even when earnings multiples remain unchanged.
“If a company turns more of each sales dollar into profit, its price of sales goes up, even if you're paying the exact same multiple.”
Listen at 8:09
The current earnings-growth theme is likely in its first half but will not continue indefinitely.
“I would think we're in the first half of the innings. But I don't think it's going to continue on forever.”
Listen at 10:27
U.S. earnings will eventually return to their long-term channel.
“I think this is going to come back into the channel.”
Listen at 10:34
The market currently trades at a 19-times multiple below its five-year median.
“The market multiple is 19x right now, excuse me, which is below the five-year median multiple.”
Listen at 11:16
Recent technology earnings growth is meaningful because it follows a high earnings base.
“the earnings growth that we're looking at here it's not off of a low base it's actually off of a high base which makes it all the more meaningful”
Listen at 14:00
Several familiar consumer stocks have suffered substantial drawdowns.
“AutoZone and a 32% drawdown. Domino's Pizza down 28%. Lululemon. down 55%. Uber, 28. Nike, down 50.”
Listen at 15:43
McDonald’s has not outperformed the S&P 500 since 2007.
“McDonald's hasn't outperformed since 2007.”
Listen at 18:22
Nike’s share price is approximately unchanged since 2014.
“Nike's at its same price since 2014. It has its own lost decade”
Listen at 18:35
Familiarity with a brand does not by itself justify investing in its stock.
“just because you know a brand and use their product does not mean that they're a stock that you should be investing in.”
Listen at 21:16
Current speculative activity reflects ordinary bull-market behavior rather than fraud.
“we're in a bull market and this is bull market behavior.”
Listen at 25:32
Fraud involving complex IPO structures is more likely during massive bull markets.
“that type of stuff probably only happens during massive bull markets when there's incredible IPOs happening.”
Listen at 27:23
Apple has become extremely uncorrelated with the other Nasdaq 100 constituents.
“Apple is coming becoming extremely uncorrelated with the remaining other 99 nasdaq 100 stocks”
Listen at 28:51
The market’s unusually low correlation will eventually change.
“this relationship is not sustainable. Now, it doesn't mean that the crisis is coming or anything. I'm not suggesting that, but this will change”
Listen at 31:42
Healthcare and energy are supporting the index while other sectors weaken.
“health care and all the other sectors energy are kind of holding us up holding the index up as these other sectors kind of you know feel the pain”
Listen at 32:35
Apple’s foldable iPhone will debut above $2,000.
“this new phone is going to debut at over $2,000.”
Listen at 34:41
Apple’s foldable iPhone will be a successful release that drives switching.
“I really do think it's going to be a great product release. Like people are going to say ditch their current iPhones and switch.”
Listen at 35:39
Consumers will resist paying $2,000 for Apple’s foldable phone.
“people aren't going to want to pay $2,000 for something that's just like they're already getting tired of.”
Listen at 36:10
SpaceX’s share price rose from $108 to $154.
“it went from $108 to $154 today.”
Listen at 38:03
The market absorbed SpaceX’s large share unlock without lasting disruption.
“the market freaking absorbed it. And we just moved on.”
Listen at 38:44
Known risks become priced into assets once broadly known.
“The known risks are priced in the second that we all know them.”
Listen at 40:13
Markets cannot fully price in a much larger share unlock compared with 900 million shares.
“there's a difference between 900 million shares unlocking and 5 billion. You can only price in so much”
Listen at 41:32
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
