Buying US stocks now is not cost-effective, keeping some cash is more stable Tonight, the United States released the May CPI, with a market expectation of 4.2% year-on-year. If realized, it will be the highest since April 2023. In April, it was already 3.8% and is still on the rise. The core CPI is expected to be 2.9%. CME FedWatch shows that futures traders no longer expect any interest rate cuts in 2026. This is the biggest contradiction in the current market: the stock market is at its all-time high, while inflation is accelerating again, and expectations of interest rate cuts have disappeared. The CAPE (Cycle Adjusted Price to Earnings Ratio) is 39.9, with a historical average of 17.7, and now it is 2.25 times the average. In the past 143 years, only the peak of the Internet foam in 2000 was higher than it is now. The Buffett index is close to 190%, higher than the peaks in 2000 and 2007. The risk premium of stocks has been pushed to an extremely low level, and the compensation that can be obtained by bearing stock risks is very thin. The rise of the US stock market in the past decade has two engines: profit growth and liquidity expansion. Both are currently experiencing issues. Profit growth is increasingly concentrated in a few companies, and the market breadth of the S&P 500 is deteriorating. The expansion of liquidity is blocked by inflation, and the Federal Reserve has no room to release water. The yield of 10-year treasury bond bonds is more than 4.5%. The situation in the cryptocurrency market is even more difficult. Many people think that if the US stock market fails, funds will flow into cryptocurrency, but in fact, cryptocurrency and the US stock market are different water levels of the same liquidity tide. When the tide rises, encryption rises the most fiercely, and when it retreats, it also retreats the deepest. In 2022, the Federal Reserve raised interest rates, causing the Nasdaq to fall by 33% and Bitcoin to fall by 65%. The direction is completely consistent, only the amplitude is different. Currently, AI capital expenditures exceed billions of dollars annually, and with the upcoming three giant AI IPOs, funds that could have flowed into cryptocurrency are still being drained from the market. The current macro environment can be summarized in one sentence: valuations are at historical extremes, inflation is accelerating again, liquidity is shrinking, and AI is investing money but has not yet started digging money. If these four conditions are met simultaneously, the market's margin for error is very narrow. Looking at the current AI stocks again. The AI story of the S&P 500 is highly concentrated among a few giants: NVIDIA, Microsoft, Google, Amazon Meta。 Stripping these companies, the profit growth of the remaining S&P stocks is actually quite mediocre. The index is rising, but the number of companies participating in the increase is decreasing. These giants invest billions of dollars annually in building AI infrastructure, but the revenue growth of downstream applications has not yet caught up. The gap between AI capital expenditure and AI revenue is currently the biggest unresolved issue in the market. Huang Renxun said that AI stocks are still very cheap now. But he is a shovel seller, and the most stable way to make money during the gold rush is always to sell shovels. NVIDIA's performance is indeed good, but the underlying assumption of the current stock price is that profits will multiply several times and be maintained. If the actual outcome is good but not as good, the stock price can drop significantly while the company itself is completely fine. The data from 155 years tells us that when CAPE is in the highest quartile, the average real return over the next 10 years is only 3.6%, with 24% of the samples being negative. When in the lowest quartile, the average return over the next 10 years is 10.7%, with zero negative returns. Buying expensive and buying cheap are two worlds. A small amount of cash in hand that allows for the ability to buy options at a low price in the event of a significant market downturn, avoiding being forced to wait for years due to a deep pullback and adding some flexibility to oneself. Not as investment advice, DYOR。