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You’ve probably seen the headlines everywhere — warnings about an AI bubble, market valuations getting out of control and predictions of an imminent crash. The fear-mongering is relentless.
But here’s what nobody’s telling you: The actual data doesn’t support the panic.
I recently took a closer look at price-to-earnings (P/E) ratios over the past year, which is one of the most basic and reliable valuation metrics we have. And what I found should change how you’re thinking about this market right now.
The P/E ratio has essentially gone nowhere over the last year. And the reason for that is simple — the market’s moved higher, but earnings have kept pace. When profits rise alongside prices, valuations stay balanced rather than stretched.
Earnings Are Keeping Pace with Price
Year to date, the stock market’s up about 16% over the past year, but valuations haven’t expanded much. That’s because corporate earnings have largely kept up with that price appreciation.
In other words, we are no more overvalued right now than we were at the beginning of the year — even though the market’s climbed significantly higher.
That’s not a bubble. That’s a very healthy growth cycle.
This is the same dynamic I leaned on when we saw a small pullback recently and stepped in to buy at the 100-day moving average. The fundamentals supported the move and the technical setup gave us an attractive entry.
It’s a reminder that disciplined strategy beats emotional reactions every time.
And seasonally, December tends to be one of the strongest months in the market, which only reinforces the broader positive environment we’re in.
Don’t Let the Headlines Scare You
So why all the fear? Because news outlets are just trying to get you to click so they can sell some ads. That’s the truth of it.
A perfect example popped up recently. In the early afternoon, one major outlet ran a headline saying Tesla (TSLA) was slumping because of delivery numbers. By the end of the day, once TSLA finished higher, they pushed out another headline saying TSLA was rising because of those same delivery numbers.
Same story — completely opposite narratives depending on what would generate more engagement in the moment.
That’s exactly why relying on headlines for financial decision-making is a losing game.
Look, I’m not saying you should ignore risk or stop doing your homework. But when the fundamentals are solid — when earnings are supporting price action — you don’t need to be paralyzed by fear.
P/E ratios are really healthy right now, and we’re in a very good growth environment. Don’t let sensational headlines distract you from what the data is actually showing.
Stay focused. Stay disciplined. And don’t let the noise derail you.
Graham Lindman
Graham Lindman Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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