Welcome to the Lam Lens, where we bring clarity to
the world of finance.
I'm Kelsey Berryman, senior wealth strategy associate at The Lam
Group, joined by Evans Lam, managing director, wealth management and
senior portfolio manager at UBS Financial Services, Inc.
Our team is located in Pasadena, CA, and you can
reach out to us at evans.lam@ubs.com.
Our goal is simple: to educate, debunk financial myths and share
our team's lens on the markets.
Happy New Year, my dear followers.
This is Evans Lam.
I just wanted to do a quick recap of our
market 2025.
The Dow has been up 14, the S&P 16 1/2.
The NASDAQ is up 20% and then more importantly is
the Mag 7, which is the technology driven 7 companies
up 23%.
So the message is very clear that Mag 7 accounted
for 46% of the market valuation.
So if you invest in Mag 7, you're going to
have great performance, otherwise you will miss out big time.
And that's why there's also a difference between the Dow
at 13 and also the NASDAQ at 20%.
Now the market basically has been full of volatility, especially
since April, the Trump tariff.
And yet throughout the past nine months, the
market petitioners has been getting very sophisticated.
The traders and also a lot of individual investors, they
are betting on TACOs.
Trump will always chicken out.
So within that they always kind of buy low and
and trade on the news.
Once they hear any negative announcement from Trump, they figured
out that at some point he will chicken out and
the market will recover.
So within that strategy, a lot of institutional investor and
even individual investor make good money.
Then the question is that, is the market expensive?
Right now at year end, the market is trading at 22
times the forward multiple, PE earning multiple.
Now that is historically very high.
If you look at the last 30 years, the average
is 17 times.
If you look at the highest point is before the
Internet bubble that was March 2000 and the market was
trading at 25 times multiple.
So you look back, you say well from the PE,
it is very expensive, the market, and yet the market
you can argue is well supported by the earnings.
Because if you look at the last 30 years, the
earning growth, earning per share among the SP 500 companies
is only 7.3%.
And yet for the last five years, earning per share
has been up close to 12% a year over the
last five years.
So that is why you can argue both way that
the key, to me, is that it is the upside
on the market is only two reason: number one is
the AI revolution that either you believe in the AI
that will carry out the day with all the, you
know, the new technology and the application of the AI
revolution.
So that is the major factor.
The second factor is FOMO, F-O-M-O, fear of missing
out.
Everyone has to get in.
They basically ignore the level.
So the question is that for 2026 with the AI
revolution, the AI excitement continues and that will be what we'll
talk about it on our 2026 outlook.
Thank you for listening to this week's episode of Lam Lens.
You can visit us at advisors.ubs.com/thelamgroup For more
information.
See you next week.
This podcast is presented for informational purposes only and should
not be relied upon as investment advice or the basis
for making any investment decisions.
It does not constitute an offer to sell or a
solicitation of an offer to buy any specific product or
service.
UBS does not provide legal or tax advice and we
would recommend listeners to obtain appropriate independent professional advice.
Some of the views and opinions expressed may not be
those of UBS AG or its affiliates.
UBS Financial Services, Inc offers investment advisory services in its
capacity as an SEC Registered Investment Advisor and brokerage services
in its capacity as an SEC Registered Broker Dealer.
These services are separate and distinct, differ in material ways,
and are governed by different laws and separate arrangements.
It is important that you understand the ways in which
we conduct business and that you carefully read the agreements
and disclosures that we provide about the products or services
we offer.
For more information, please review the Client Relationship Summary provided a ubs.com/relationshipsummary.
UBS Financial Services, Inc is a subsidiary of UBS Group AG
and is a member of FINRA and SIPC.