Are Stocks Overvalued and Should You Be Worried?

Today’s letter is brought to you by Consensus Miami ! I’m speaking on the Mainstage at Consensus Miami this May 5-7 — the event the entire industry shows up for, from Wall Street, the White House, and all of Web3. 20,000+ decision-makers. 72% director-level or above. Three days where deals get signed, funds get raised, and the next cycle gets shaped. This year’s agenda tackles the three forces driving trillions on-chain and reshaping global finance: crypto at scale, institutional integration, and agentic commerce. You can’t afford to miss it. Use code POMPLIANO for 25% off your pass and join me there. REGISTER & SAVE To investors, Momentum begets momentum. Returns attract capital. New all-time high stock prices bring even higher prices. And nowhere in finance is there more momentum and returns than in technology stocks. Bluekurtic Market Insights writes “for the first time in 17 years, the Nasdaq 100 is up four consecutive weeks with gains exceeding 18%. This kind of momentum is usually bullish for the Nasdaq. One month later, the index was higher in six of seven cases, with a median gain of 8.5%.” A big reason why the Nasdaq is doing so well is because of semiconductor stocks. Depending on how you count, there are about 15-18 semiconductor stocks in the Nasdaq index and Opening Bell’s Phil Rosen points out how well those companies have done. Semiconductors are destroying software stocks this year. - iShares Semi ETF $SOXX +53% - iShares Software ETF $IGV -19% 72% spread between 2 sides of the AI trade. Any time investors see a sector explode in popularity like these semiconductor stocks have in the last few weeks, it begs the question on whether the returns have already been captured by the market. David Marlin writes “77% of [the semiconductor index] ($SOX) constituents are overbought, the second highest reading in the last 20 years. After similar readings, short-term returns were generally muted (2 week average of -1.9%, 1 month average +0.2%), but returns 5+ months out have been extremely positive.” The average return 6 months out has been about 19%, which would suggest that semiconductor stocks have a lot of room to run if history repeats itself. These semiconductor stocks are a big reason the S&P 500 has made a miraculous recovery from its dismal start to the year. Creative Planning’s Charlie Bilello writes “On March 30, the S&P 500 was down 7% in 2026, the 12th worst start to a year in history. After one of the biggest 4-week rallies ever, it's now up +5% YTD and above the average year at this point in time (+3%). There is no impossible in markets.” This is noteworthy because many investors are worried the market is overvalued right now. Take Global Markets Investor as one example . They write “The US stock market is EXTREMELY EXPENSIVE. The number of large stocks with a price-to-sales (P/S) ratio above 10, and year-over-year price gains above +100% has surged to ~175, the highest level since the 2021 meme stock frenzy. Excluding 2021, this is the highest level since the 2000 Dot-Com Bubble burst.” But if you just look at historical valuations, you miss the bigger picture. Daily Chartbook highlights “With 28% of the index reported, 84% of companies have delivered higher-than-expected EPS. This is above the 5- and 10-year averages. In aggregate, companies are reporting EPS that are 12.3% above estimates. This is also higher than the 5- and 10-year averages.” Mike Zaccardi also points out that “tech is at an all-time high, but its P/E is still 8 figures lower than the October 2025 high.” So are stocks overvalued? It isn’t clear to me that people should be worried. In fact, there are numerous areas in financial markets that are not performing as well as semiconductors or tech more broadly. Charlie Bilello highlights that “with the exception of Bitcoin, every major asset class is now in positive territory on the year.” And Jim Bianco shows that defense stocks are getting crushed during the Iran war. Big narrative violation for both bitcoin and defense stocks. But just because these assets have not done incredibly well doesn’t mean they can’t turn it around in the coming days. Take bitcoin for example. Frank Fetter shows that “long-term holder supply is going absolutely vertical. Not a lot of sellers.” And he explains that “historical premiums [are] being paid to short bitcoin here at $78,000, three standard deviations away from the mean. The shorts are playing with fire right now.” So you have significant accumulation underway, along with short-sellers piling into an over-extended trade, which puts together the perfect ingredients for an asset like bitcoin to surge higher. Add in the backdrop of stocks going higher, along with Kevin Warsh potentially becoming the next Fed Chairman, and you have more components to a story where all asset prices are going to appreciate rapidly. We are in a generational bull market. We have been locked in this environment since we came out of the 2008 Global Financial Crisis. The central bank is supporting the market in a way that was previously deemed off limits. So whenever you see a pessimist promising you how bad the future will be, or how much destruction you will see in your portfolio, just remember to never buy into nonsense. The modern Industrial Revolution is underway. We are rebuilding the infrastructure necessary for America to prosper for the next 100 years. Owning a piece of that trend is likely to pay off handsomely for those who are willing to do the work and understand what is happening. Hope everyone has a great day. I will talk to you next time. - Anthony J. Pompliano Founder & CEO, ProCap Financial (Nasdaq: BRR) Why Bitcoin WINS No Matter What Happens to Inflation Jordi Visser is a veteran macro investor with 30+ years of experience and the author of the VisserLabs Substack . In this conversation, we discuss why bitcoin is decoupling from software stocks, how it wins in both inflationary and deflationary environments, and the five scarcity-driven investment baskets Jordi is tracking right now. We also get into the AI agents shift, why public companies are struggling to adopt AI, and how to position a portfolio in a world of shortages. Podcast Sponsors Figure – True DeFi Democratized Prime to earn ~9% APY! They also have the lowest industry interest rates at 8.91% with 12 month terms! Take out a Bitcoin Backed Loan today and buy more Bitcoin. Check out Figure ! Figure Lending LLC dba Figure. Equal Opportunity Lender. NMLS 1717824. Terms and conditions apply. Arch Public - Arch Public’s cutting-edge algorithmic tools ignite profits, harnessing razor-sharp data analytics to nail perfect entries, exits, and risk management. Turn volatility into opportunity and do it hands free with Arch Public. (Oh, and yes, try us out for FREE too!) Uphold - Uphold is the all-in-one platform to trade, earn, stake, and swap across 300+ assets with real-time proof-of-reserves and any-to-any conversions. Manage your entire crypto portfolio in one place at www.uphold.com Consensus Miami - May 5-7 • Join 20,000 decision-makers for the convergence of crypto, capital & culture. Save 25% with POMPLIANO . Award-winning Fountain Life - Energy supercharged. Memory sharper. Life extended. Ready for the best investment you’ll ever make? Schedule a life-changing call at www.FountainLife.com Bitget - Bitget is the world’s largest Universal Exchange (UEX) , serving over 125 million users with access to over 2M+ crypto tokens, and TradFi markets such as 100+ tokenized stocks, ETFs, commodities, FX and precious metal like Gold BitcoinIRA - Buy, sell, and swap 80+ cryptocurrencies in your retirement account. Pay less taxes. Earn up to $2,000 in rewards. Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit https://www.simplemining.io/pomp 🚨READER NOTE: If you want to sponsor The Pomp Letter, you can fill out this form and someone from our team will get in touch with you. You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.