Given that the S&P 500 is currently valued at a premium to corporate profits when compared to long-term averages, there are plenty of indicators that the long bull market for U.S. equities is nearing its end.
However, this does not preclude the existence of potential catalysts to advance particular sectors or industries.
Jamie Chisolm highlighted the opinions of Bank of America analysts in the Need to Know column early Friday. These analysts think there is some rationale behind the high price of the stock market overall. However, they also think that a rise in financial equities could be extended by deregulation during Donald Trump’s second term as president.
Purchasing shares in sector funds is a clear strategy to profit from that expected rally. One such example is the Financial Select Sector SPDR ETF XLF, an exchange-traded fund that, like the entire S&P 500 SPX, is weighted by market capitalization and tracks the S&P 500 financials sector. With the Invesco S&P 500 Equal Weight Financials ETF RSPF, concentration risk can be avoided.
The Invesco KBW Bank ETF KBWB is another option if you want to focus on banks at a time when the Trump administration has solidified its hold on federal regulators and has already taken actions that could force the Consumer Financial Protection Bureau to close. This ETF owns shares of 24 of the biggest banks in the United States, allowing it to track the KBW Nasdaq Bank Index BKX. The 50 equities in the KBW Nasdaq Regional Banking Index XX:KRX are held by the Invesco KBW Regional Bank ETF KBWR, which you may add exposure to to expand this trade.
There are numerous options for active financial management. Macrae Sykes, the manager of the Gabelli Financial Services Opportunities ETF GABF, talked about it in an October interview with MarketWatch. It combines financial services with an emphasis on technology and innovation.
Warren Buffett, the CEO of Berkshire Hathaway Inc. (BRK.B), the company that owns the most GABF, is anticipated to release his yearly letter to shareholders early on Saturday. After analyzing the stock’s performance, Mark Hulbert gave his reasoning for believing that Berkshire will underperform the S&P 500 in the upcoming years.
An further examination of “the last leg of the bull run” in stocks
As 2025 seemed to be the “first year of the last leg of the bull run,” for U.S. stocks, Charles Lemonides, the founder and chief investment officer of ValueWorks, a hedge fund based in New York, told Barbara Kollmeyer that value-oriented investors would still need to exercise patience.
The “Magnificent Seven” tech-focused corporations make up a large portion of the S&P 500. 32% of the SPDR S&P 500 ETF Trust SPY is comprised of the following companies: Apple Inc. (AAPL), Nvidia Corp. (NVDA), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), Alphabet Inc. (GOOGL) (GOOG), Meta Platforms Inc. (META), and Tesla Inc. (TSLA). Their high concentration in the large-cap U.S. benchmark index has rewarded these companies’ success, but there is a catch:
Lemonides responded, “You’re dead if you do that,” when asked if it would be wise for investors to keep being so exposed to Big Tech. He suggested three stocks with “high-quality assets” that are valued higher than the stock prices of the firms at the time of his recommendation.
More market warnings:
- The stock market looks good from the outside – but inside it’s another story
- The stock market’s previous breakneck pace is slowing down. Here’s what investors can expect next.
Should you buy gold?
In the Fix My Portfolio column, Beth Pinsker outlined the case for investing in gold, its long-term performance and various risks associated with buying, selling and storing bullion.
More gold coverage:
- Hulbert: Gold may soar past $3,000 – but at these prices you’re overpaying
- Trump’s talking about auditing Fort Knox. It might be a $750 billion maneuver.
