The perception of a market rally driven solely by a few tech stocks is misleading. The S&P 500 excluding the top 10 companies has seen strong earnings growth and consistent ~15% annual returns for the past three years, indicating broad market health.

Today's high S&P 500 valuation isn't a bubble. The market's composition has shifted from cyclical sectors (where high margins compress multiples) to mature tech (where high margins expand them). This structural change supports today's higher price-to-sales ratios, making the market fairly valued.

The market's recent strength is not being driven by the mega-cap MAG7 stocks, which are underperforming. Instead, leadership has rotated to sectors like basic materials, healthcare, industrials, and financials. The breakout in the equal-weight S&P 500 confirms this widening breadth is occurring under the surface.

When markets are top-heavy and expensive, like in 2000, the concentration risk of market-cap weighting is severe. In the 13 years after the dot-com peak, while the S&P 500 went nowhere, its equal-weighted version doubled, highlighting a powerful de-risking strategy.

Unlike the speculative internet bubble, today's market is supported by an 'early cycle earnings backdrop' following a recent rolling recession. Capital is not just chasing long-term AI dreams but is also flowing into classic cyclical winners with strong current earnings, indicating a more fundamentally sound recovery.

A "Goldilocks" scenario of steady growth and disinflation could propel the S&P 500 to 8,000 by early 2026. This isn't a bubble prediction; rather, the market's structural shift to higher-margin tech companies means such a level would represent fair value, not dangerous overvaluation.

Following a dovish Fed meeting, the outperformance of small-cap stocks (IWM ETF) versus large-cap tech is the key signal of a healthy, broadening market rally. This indicates capital is flowing beyond mega-cap names into the wider economy, confirming a "game on" sentiment for risk assets.

The current AI market resembles the early, productive phase of the dot-com era, not its speculative peak. Key indicators like reasonable big tech valuations and low leverage suggest a foundational technology shift is underway, contrasting with the market frenzy of the late 90s.

Despite pessimistic CBO reports, strong GDP growth, massive AI-related Capex ($600B from just four hyperscalers), and robust private sector job creation signal an economic boom. This period may be looked back upon as a new 'golden age' masked by political noise, similar to the late 1990s.