In partnership with
Welcome to The Profit Zone 👋
Where thousands of millionaires, CEO’s and high-performing entrepreneurs read the #1 financial newsletter on the web.
👉 The Stock Market: Updates in 30 Seconds or Less ✍
👉 Stock Market Valuations and Concentration Risks: August 2025 Outlook 🔎
👉 Are We Heading For A Recession? Here’s How To Protect Yourself 🪖
👉 Take Back Control of Your Money: Financial Domination is the Key 🔑
“You can lose money very fast, in two months, but you very rarely make money very fast in the stock market. When I look back, my great stocks took a long time to work out.”
The Stock Market in 30 Seconds or Less
A federal appeals court struck down Trump’s signature tariffs on Friday, ruling that his use of emergency powers to reshape U.S. trade policy was considered “excessive”.
U.S. stocks fell Friday, with the Nasdaq dropping 1.2% as major AI stocks fell due to weak AI-related results.
Inflation held steady at 2.6%, boosting expectations for a September Fed cut, now sitting at an 87% likelihood.
The S&P 500 saw its 4th consecutive monthly gain despite a weak jobs report and newly announced tariffs.
Find out why 1M+ professionals read Superhuman AI daily.
AI won't take over the world. People who know how to use AI will.
Here's how to stay ahead with AI:
Sign up for Superhuman AI. The AI newsletter read by 1M+ pros.
Master AI tools, tutorials, and news in just 3 minutes a day.
Become 10X more productive using AI.
Stock Market Valuations and Concentration Risks: August 2025 Outlook
As we wrap up the month of August 2025, the stock market continues to show warning signs of extended valuations and heavy concentration in a handful of mega-cap stocks.
The S&P 500 has surged this year, up 10% YTD as I write this, but a lot of those gains can be attributed to the “so-called’ Magnificent 7: Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla, which now account for over 30% of the indexes total market capitalization.
We’ve seen this before in the dot-com bubble, where similar tech dominance led to the S&P 500 losing more than 60% of its value.
I’m not writing this post to scare you, but rather make you aware of the risks associated with a market such as this.
Valuations are sky-high and the market is expensive, that’s a reality.
The S&P’s forward P/E ratio hovers around 22x, well above the historical average of 17x. These are in fact “nosebleed” levels that create a larger risk for a potential correction, or worse, another recession.
The chart below shows where we sit today in relation to market highs in 1929, 1965 and 1999. Something has to give.
If you’re tracking this “potential downturn”, here are some factors you may want to follow:
Rising 10-year Treasury Yields: investors are always seeking the strongest risk-adjusted returns. If they can earn safer returns in something like a bond, they’ll tend to sell riskier investments such as stocks. The 10-year treasury sits at 4.23% today, and the S&P 500 forward earnings yield is 4.29%. What this means is that investors are only generating a small premium for holding stocks over the safer return on bonds. This poses the question: why buy stocks right now?
AI Spending During Rising Tariffs: In Q2 2025, AI spending was estimated at 1.3 percentage points of the 3.3 percentage growth in GDP (about 40%). What does this mean? It means a slowdown in AI spending could lead to a drastic decline in economic growth, because it made up such of large percent of the growth in the previous quarter. And given the high concentration of the S&P 500 in AI related stocks, any slowdown in spending could have a large impact on the market. If you’re holding individual companies, it may be wise to track the Return on Invested Capital (ROIC) for these AI investments. A recent MIT study found that despite a $30-$40 billion investment in generative AI, 95% of companies are seeing no return. That could be a problem in the short term, especially as costs continue to rise as a result of Tariffs.
Unemployment: A good test of the economies strength are the unemployment figures. The market was shocked in July to see that the economy gained just 73,000 jobs vs. an estimate of 115,000. Less jobs = less disposable income = less economic activity = lower company earnings = lower stock prices.
But enough about the bad stuff, here’s how you protect yourself from holding a potential falling knife.
To mitigate these risks, investors should be prioritizing diversification strategies.
Shifting towards equal-weighted S&P 500 ETFs, thereby reducing your exposure to mega-cap stocks have shown to outperform during periods of high volatility.
You may also want to consider exploring international markets, as global diversification can help buffer companies that are concentrated in the U.S.
Start looking at small-cap stocks and stocks trading closer to or below fair value. Low-volatility and defensive stocks, like utilities or consumer staples, provide more stability in your portfolio.
Also discount stores always do well when the economy is under pressure. Think $WMT ( ▲ 0.91% ) $DOL.TSX ( ▲ 1.19% ) $DLTR ( ▼ 2.96% ) $TGT ( ▼ 0.86% ).
Finally, and considering the 10-year Treasury Yield, perhaps allocating some of your portfolio to a bond or cash-like instrument can help preserve your capital during a downturn.
Shocked by How a Tiny 5-Stock Portfolio is Crushing the S&P 500 by 22.28%? Don't Miss Out. Unlock Exclusive Picks in The Profit Zone Premium Now and Gain Your Market Edge! Subscribe Here.
In this type of market, diversification isn’t just a buzz word, it’s vital for long-term wealth preservation.
Becoming a good investor isn’t just about picking the right stocks, its also about risk management.
It’s not about how much you make, it’s about how much you can keep.
Become sustainable long term and your portfolio will reward you.
If you want to read more about the “bubble” in the tech sector, click below to read one of my past posts.
I’ll be giving my kids a weekly allowance
But they’ll have to invest 50% of the money
It won’t be a large sum, but starting then young will prove to be significant over a long period of time
Teaching your kids these habits from a young age is vital
— #THE DIVIDEND DOMINATOR (#@TheAlphaThought)
12:58 PM • Aug 29, 2025
Did you enjoy this newsletter?
Take Back Control of Your Money
Take control of your financial future with Financial Domination!
This guide, packed with over 10 years of my expertise, is your shortcut to wealth.
Whether you want to outshine your friends, protect your family from financial disasters, or travel the world without money holding you back.
Avoid costly mistakes, save time, and build a thriving portfolio with:
- Effortless budgeting and my go-to budgeting tool
- Smart brokerage picks and red flags to dodge
- Costly errors I’ve made (so you won’t)
- Personalized investing strategies and watchlist creation
- My “top-down” portfolio secret and stock-picking tool
- Portfolio balancing know-how to save on fees
Today only, grab Financial Domination for just $10 (reg. $59).
Only the first 50 buyers get this deal, then the price goes back up to $59.
P.S. if you don’t want to spend the $10 to get the ebook, start referring some of your friends and you’ll get it for free.
Disclaimer: The publisher does not guarantee the accuracy or completeness of the information provided in this page. All statements and expressions herein are the sole opinion of the author or paid advertiser.
Dividend Domination Inc. is a publisher of financial information, not an investment advisor. We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient.
THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN.
Any projections, market outlooks or estimates herein are forward-looking statements and are inherently unreliable. They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and the publisher undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.
The publisher, its affiliates, and clients of the publisher or its affiliates may currently have long or short positions in the securities of the companies mentioned herein or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.
Neither the publisher nor any of its affiliates accept any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.
By using the Site or any affiliated social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.
