To The Moon

Global equities are approaching record highs, and some analysts predict the rally could continue, supported by dip-buying activity.

The MSCI All Country World Index by Morgan Stanley is now just 0.5% below its all-time closing high of 887.72, set on February 18. Following a low in April—after former U.S. President Trump announced new tariffs—the index has since rebounded 19%.

US Stocks Near Record Highs: Is Magnificent 7 the Top Summer Pick?

According to a May 31 market insight from Goldman Sachs, as summer begins, investors are refocusing on the Magnificent 7, a group of mega-cap tech stocks that are once again outperforming the broader market.

Seen as symbols of “defensive growth,” the Mag 7 are gaining favor in an environment of elevated uncertainty. Continued economic expansion and the Fed holding interest rates steady support higher yields, prompting investors to favor financially robust companies that can withstand rate pressure.

Data from Goldman Sachs Private Wealth last week shows that U.S. equities saw net buying for a fourth consecutive week. Nominal long buying last week hit its highest level since November 2023, placing it in the 97th percentile over the past five years.

In the Information Technology sector, hedge funds logged a third straight week of net buying. In fact, last week's nominal long buying in tech was the highest in over a decade.

Despite this buying spree, hedge fund exposure to the Mag 7 remains near five-year lows.

Bubble or Breakout? Mag 7 Still Has ~30% Upside to Historical Peaks?

Bank of America (BofA) analyzed past asset bubbles and found that, on average, stock market bubbles saw 244% gains from takeoff to peak, with an average price-to-earnings (P/E) ratio of 58x.

Following a strong performance in May, the Mag 7’s current static P/E ratio has climbed back to 42x.

If history repeats — and if we use the 244% gain and 58x P/E as benchmarks — the Mag 7 may still have around 30% upside from here.

So… What Did You Buy on June's First Trading Day?

Are you watching the Mag 7, or chasing the recent tariff-themed stocks dominating the headlines?

With 30% potential upside, do you think it’s a risk worth taking?

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