Why Do Low P/E Stocks Perform Better In Overpriced Markets? Is Your Beer Budget Feeling the Gas Pump? Information Is Starting To Trickle In About The SpaceX IPO, The Breakeven on Social Security & More

Why Do Low P/E Stocks Perform Better In Overpriced Markets?

We are currently in a momentum-driven market, and many people are experiencing FOMO, which is the fear of missing out. Much of this is being fueled by AI and technology stocks, where investors are willing to pay almost any price because they believe these industries will continue growing indefinitely and they don’t want to miss the opportunity.

The problem is that high P/E stocks and companies with no P/E since there are no earnings at all already have massive future success priced into them. When the market eventually declines, as it always does at some point, it is often because these high-flying companies miss lofty expectations. That can trigger major selloffs and sharp declines in stock prices.

Low P/E stocks, on the other hand, typically have more modest growth expectations. Because expectations are lower, market downturns often have less impact on these companies. Many low P/E companies are also more mature businesses with stable cash flows, which tend to hold up better during slower economic periods. Examples include companies in consumer staples and financials.

In addition, many low P/E stocks pay dividends, which can help stabilize returns and reduce volatility during uncertain markets.

However, investors still need to be careful to avoid “value traps” which are companies with low P/E ratios that deserve to trade at low valuations. This is why understanding the “E” in the P/E ratio or the earnings is so important. You want to avoid investing in companies with declining businesses and shrinking earnings potential. Think about companies like Polaroid or Blockbuster, which failed to adapt as their industries changed.

It’s also important to remember that market cycles play out over years, not weeks or months. Just because a strategy has worked well for a couple of years doesn’t mean it will continue indefinitely. For example, it took roughly five years for the tech boom to fully unravel during the dot-com bubble.

Is Your Beer Budget Feeling the Gas Pump?

If your beer fridge has been looking a little emptier lately, you're not alone and the culprit might not be your willpower. New Nielsen scanner data shows that U.S. beer, hard seltzer, and cider volumes dropped 6.3% year over year through the week ending May 2, both on a two- and four-week trailing basis. This was nearly double the 3% declines seen between November and mid-April.

What's driving it? Analysts at Bernstein are pointing straight at the gas pump. There's a clear negative correlation between gas prices in a given state and beer volume growth, and it's becoming more visible in the data, particularly in markets with the most expensive fuel.

Average U.S. gasoline prices have risen roughly 52% since the start of the Iran war, according to AAA. That's a serious hit to household budgets and it shows. California, with fuel averaging around $6.16 per gallon, saw a 16% decline in beer volumes. Arizona and Texas weren't far behind, posting declines of 10% and nearly 7%, respectively.

Convenience stores seem to be seeing the brunt of the decline as they are highly sensitive to gas station traffic and impulse purchases tied to commuting and travel.

Not every brand is suffering equally. Michelob Ultra is holding relatively flat, while Bud Light and Budweiser are posting double-digit volume declines. Boston Beer remains the weakest performer among major brewers.

Information is starting to trickle in about the SpaceX IPO

The SpaceX IPO is expected to be the largest initial public offering on record, with the potential to raise $80 billion or more through the stock sale. Based on the information currently available, SpaceX is expected to begin its roadshow around June 4th, which could place the public offering date near June 12th.

The company is expected to trade under the ticker symbol SPCX on the Nasdaq, as well as Nasdaq Texas, which would represent a significant blow to the New York Stock Exchange.

If you plan to read the entire prospectus, be prepared to invest some time. The filing totals 277 pages, not including notes and exhibits. By comparison, a typical IPO prospectus is usually fewer than 200 pages.

Financial data shows that in 2025, SpaceX generated revenue of $18.7 billion, an increase of 33% over the previous year. However, earnings declined sharply, with the company reporting a net loss of $4.9 billion compared with a profit of $791 million in 2024. Unsurprisingly, Elon Musk will serve as CEO.

Goldman Sachs is expected to lead the offering alongside Morgan Stanley, Bank of America, Citigroup, and JPMorgan Chase. Given the size of the deal, it will certainly be interesting to see how all five firms work together. As more important information becomes available, we will continue to keep you updated.

Financial Planning: The Breakeven on Social Security

Many people look at their Social Security statement and perform a breakeven analysis to determine how long they would have to live for waiting to claim benefits to pay off. These simple calculations often suggest that claiming at 62 is best if life expectancy is less than around 78, claiming at full retirement age around 67 makes sense if life expectancy is between 78 and 82, and waiting until 70 is best if someone expects to live beyond 82. The problem is that this type of analysis is often too simplistic and can be misleading. Most breakeven calculations only compare the total dollars received at different claiming ages and ignore several important factors. First, Social Security benefits continue to receive annual Cost-of-Living Adjustments (COLAs), whether benefits are started early or delayed. Second, no one truly knows how long they will live, so any breakeven age is really just an estimate. Most importantly, many analyses ignore the time value of money. If someone starts benefits earlier, they may be able to reduce withdrawals from other retirement assets, allowing those investments more time to grow and potentially generate additional future income. When you factor in both Social Security COLAs and the potential return that could be earned on invested assets, the breakeven age often moves much later than people expect. In many cases, it can take well into someone’s 90s or beyond before delaying benefits actually produces a greater overall financial benefit. That does not mean taking benefits early is always the best choice, but it does show that Social Security decisions should be based on an overall retirement income strategy rather than a simple breakeven calculation alone.

What Generation Holds The Most Wealth In The United States?

If you guessed the Baby Boomers, who were born between 1946 and 1964, you guessed right. They now hold 51% of the total wealth in America through the accumulation of real estate, stocks, pension benefits, and private businesses they built over the years. When you combine all those assets together, Baby Boomer wealth is valued at around $90 trillion as of the end of 2025.

Doing fairly well in second place is Generation X, born between 1965 and 1980, who have managed to grow their wealth to $46 trillion, accounting for 26% of the entire wealth in the United States. Much of the Baby Boomers' wealth will eventually be passed down to Generation X. Some Baby Boomers have already passed away, with the oldest now being 80 and the youngest 62.

In 18 years, when the oldest members of Generation X turn 80, their wealth will likely far surpass the $90 trillion Baby Boomers hold today. That wealth will likely continue to compound and with 18 years of growth, it could potentially reach $360 trillion as long as they avoid making foolish decisions like gambling on speculative instruments such as cryptocurrencies, stock options, and prediction markets.

The Oil Market’s Calm May Not Last if the Strait of Hormuz Stays Closed

Oil markets have stayed surprisingly stable despite massive disruptions tied to the Iran war, but the balance is getting fragile.

According to the IEA, oil exports from producers outside the Middle East, led by the U.S., have surged by 3.5 million bpd. At the same time, China has slashed imports by 3.6 million bpd, together offsetting roughly 7.1 million bpd, which amounts to about 70% of the exports lost from the Gulf.

Japan, South Korea, and India have also reduced imports by another 3.6 million bpd, helping prevent Brent crude from spiking even higher than it already has.

But there’s a catch: this adjustment may not be sustainable.

China can likely keep drawing from its massive 1.4-billion-barrel strategic reserve for months. The U.S., however, is under increasing pressure because much of its export surge is coming from inventories and the Strategic Petroleum Reserve, not from higher production.

The U.S. held 413 million barrels in reserve at the end of last year and already committed 172 million barrels in March to stabilize markets.

As Deutsche Bank’s Michael Hsueh noted, the U.S. and China have effectively become the shock absorbers for the global oil market during the Strait of Hormuz disruption.

If the Strait does not reopen soon, those buffers begin to erode and that’s when oil prices would likely head higher.

Markets are calm for now because emergency adjustments are working. But inventories are finite, and the longer the disruption lasts, the harder it becomes to prevent a supply-driven price spike.

How Is The K-shaped Recovery Going?

You may have heard the term “K-shaped economy.” It describes the growing divide between the wealthy segment of the economy and lower income households. The upper arm of the “K” represents higher-income earners, business owners, and people with significant investments in real estate or stocks. The lower arm represents lower-income households.

Those on the lower arm of the K are impacted more heavily by inflation, rising housing costs, everyday living expenses, and job market instability. In a K-shaped recovery, the upper segment continues to thrive while the lower segment struggles to keep up.

What we are seeing today is that many people on the upper arm of the K are still spending at strong levels. Real spending among households earning more than $125,000 per year is up nearly 8% since 2023. It is also worth noting that the top 20% of earners now account for roughly 60% of consumer spending. That becomes a concern because if that top 20% were to significantly slow down spending, the broader economy could weaken dramatically.

When it comes to overall wealth, the top 10% of households own roughly 87% of all corporate equities and mutual funds. That does not mean lower- and middle-income households should avoid investing, but the scale of their investments is far smaller compared to the wealthy, limiting their overall influence on markets.

It is interesting when mayors or governors push for higher taxes on top earners. If high-net-worth individuals decide to leave a city or state, the local economy could lose a meaningful amount of tax revenue and consumer spending. Many people support the idea of taxing the rich, but today’s wealthy households are often far more mobile than they were in previous generations. In the past, people were more likely to stay where they were born for most of their lives. Today, relocation is far more common.

Recent numbers show that roughly 59% of Americans still live in the state where they were born, meaning 41% have moved elsewhere. While there is no exact figure showing how many wealthy individuals relocate for financial reasons, it is reasonable to assume that people with greater financial resources have more flexibility to move to lower-tax states if they choose.

Wheat Production Projected to Decline in 2026

Wheat is used in many different foods, such as breads, pizza crusts, bagels, and croissants. You also can’t forget other tasty favorites like cakes, cookies, crackers, pretzels, noodles, and flatbreads.

The USDA is projecting that only 1.56 billion bushels of wheat will be produced in the United States in 2026, down 21% from 2025, when 1.98 billion bushels were produced. The decline is largely being blamed on weather conditions. Drought across the western Plains is expected to reduce wheat production because of limited water availability.

Corn production is also expected to decline, while soybean production is projected to increase slightly.

What does this mean for consumers? Unfortunately, prices for many wheat-based foods could rise slightly in the coming months. So, if you’re a fan of cookies and crackers, it might be a good idea to stock up before those price increases hit the shelves.

If You Just Graduated With a Bachelor’s Degree And Are Thinking About Getting A Master’s Degree, You May Want To Think Again.

For many people who graduate with a bachelor’s degree, the next step seems to be earning a master’s degree. Many believe it will help them find a job more quickly and earn a higher salary. Unfortunately, times have changed. The unemployment rate for workers under 35 with a master’s degree shows that this is one of the worst periods in the past 20 years for people holding advanced degrees.

Part of the problem is that over the last 20 years, master’s degree programs have increased by 69%, reaching around 33,500 programs nationwide. Because so many people now hold master’s degrees, the degree has lost some of its distinction and value in the job market. The situation has become so severe that workers under 35 with master’s degrees are now in the 77th percentile for unemployment.

In a survey conducted by the Drexel University LeBow College of Business, 40% of employers said they had no plans to hire MBA graduates this year. This is a significant increase from the 26.8% reported in 2025 who said they did not plan to hire MBAs. In contrast, workers under 35 with PhDs, law degrees, or medical degrees remain in much higher demand.

It Looks Like Your Odds Are Better At The Casino Than In The Prediction Markets.

The Wall Street Journal recently published a strong analysis of prediction markets such as Kalshi and Polymarket, and the numbers are staggering. At one point, the analysis even suggested that the odds may actually be better at a casino than in prediction markets for the average small investor.

The analysis of Polymarket found that 67% of all profits went to just 0.1% of accounts. In real numbers, that means nearly half a billion dollars went to only about 2,000 accounts. The Journal based its findings on 1.6 million Polymarket accounts that had been trading since November 2022. Considering the platform has roughly 2.3 million accounts total, that is a substantial sample size.

The numbers were not much better for Kalshi, where nearly three people lose for every one person who wins. That is nowhere close to the 50-50 odds many people assume they are getting. Although that study covered only a one-month period, the trend was still concerning.

Prediction markets are often advertised with slogans suggesting that “users can monetize what they already know to make a quick buck.” However, the investigation found that most of the winnings go to sophisticated traders who spend hundreds of thousands of dollars each year on advanced data feeds and market information. These traders often do not even hold their positions until the end of an event. Instead, they repeatedly trade contracts, hoping less experienced traders will make emotional or poorly informed bets that increase their profits.

Unfortunately, many young and inexperienced users are doing exactly that. One sophisticated trader was even quoted as saying that sports markets attract “all the sick young men.”

One of the most troubling examples involves “mention markets,” where people can bet on whether a public figure will say a certain word during a speech. During the President’s State of the Union address, more than $28 million was wagered on whether certain words would be spoken. In February alone, nearly $181 million was wagered on Kalshi markets.

To better understand prediction markets myself, I decided to test one with $100. It took only about five minutes to sign up, and I was even able to use a credit card to fund the account. My balance quickly grew to $150 after betting on the Super Bowl winner. I won one more time, but then lost three straight bets. Now my original $100 is down to just $14, and I still have not figured out how to withdraw what remains.

I strongly recommend that people stay away from prediction markets. You may think you know more than the average bettor, but there are professional traders spending hundreds of thousands of dollars on data, analytics, and information and they are betting against you.