by Bryan Perry
June 2, 2026
The mantra of buy and hold has served investors well over the long run, but the modern market landscape occasionally throws us some wicked curve-balls, and standard indexing cannot easily solve this puzzle.
Equity markets look historically extended, but this is not a 1999 Dot-Com scenario, where companies with zero revenue traded at infinite valuations. Today’s tech giants are generating billions in cash flow.
The current macro environment is a complex web of persistent inflation, elevated interest rates, and geopolitical uncertainty. Additionally, the extended nature of the market is highly concentrated. The investment boom in Artificial Intelligence (AI) infrastructure is driving roughly half the index’s earnings growth. Mega-cap technology and semiconductor companies put up staggering numbers, which makes the broader index look incredibly expensive, while the equal-weighted market is more reasonably valued.
However, because consensus estimates expect a flawless 23% earnings expansion for the rest of the year, some argue the market as a whole is “priced for near perfection.” But if inflation returns, or consumer spending slows, or if the massive capital expenditures into AI infrastructure show the slightest sign of delayed monetization due to outside variables, these high P/E multiples are at risk of contracting.