Stocks continue to rise even as valuations look more like helium balloons than bargains. A market correction is increasingly likely, but investors who stay in the game with a risk-conscious approach can still profit. We’re offering a webinar that shows how to build $1,000 in steady income, rain or shine. We also provide a free video.
Dear Investor,
Stocks keep climbing on the hope that Washington’s chaos will self-correct and artificial intelligence will keep churning out endless profits. For now, the market feels untouchable, but valuations are stretched, the economy is unraveling, and seasoned investors know every high eventually meets the pavement.
No need to hit the panic button or sell everything and move to a bunker. But thinking defensively, as you simultaneously pursue growth, is a shrewd idea.
“Defensive growth” might not sound sexy, but it beats chasing the next tech darling straight off a cliff. Read on; we’ve got your silver linings playbook.
Surging Market, Strong Earnings, Lurking Risks
Even as some sectors wobble, the main U.S. equity indices remain near record highs, led (again) by the usual suspects: mega-cap tech stocks. AI enthusiasm continues to power the narrative, though reality has been trying to intrude with mixed success.
Recent remarks from bank CEOs about credit risk briefly interrupted the euphoria, but only briefly. The market took a breath, then went right back to its regularly scheduled optimism.
Still, when everyone’s on the same side of the trade, it’s usually time to get more cautious. That doesn’t mean heading for the hills; it means being prepared.
To be sure, third-quarter 2025 earnings season has been solid: the majority of S&P 500 companies have beaten expectations.
For Q3 2025, the blended year-over-year (YoY) earnings growth rate for the S&P 500 is 13.1%, according to research firm FactSet. “Blended” combines actual with projected results. Nearly all companies have reported.
If 13.1% turns out to be the actual growth rate for the quarter, it will mark the fourth consecutive quarter of double-digit earnings growth for the index. Companies also are generally issuing positive guidance for future quarters.
For Q4 2025 through Q2 2026, analysts are projecting YoY earnings growth rates of 7.5%, 11.8%, and 12.7%, respectively. For calendar year 2025, the forecast calls for YoY earnings growth of 11.6%.
However, even though these growth rates are strong, they still don’t support increasingly frothy valuations.
The forward 12-month price-to-earnings (P/E) ratio of the S&P 500 currently sits at 24.08 (as of market close November 11), well above the 10-year average of 18.6. Even great companies can become bad investments if bought at the wrong price.
Deepening Pessimism
The economy is another dark cloud. The Bureau of Labor Statistics didn’t release an October jobs report, due to the government shutdown. But don’t worry, Goldman Sachs (GS) filled the void, estimating the U.S. shed about 50,000 jobs last month. Just a grim reminder from Wall Street that the country might be cruising straight into a recession.
Small-business optimism? Gone. NFIB data out Tuesday showed sales stalling, costs climbing, and earnings expectations plunging nine points, the worst since the pandemic.
Meanwhile, American consumers haven’t felt this bleak in more than seven decades. The University of Michigan’s preliminary consumer sentiment index for November 2025 plunged nearly 30% from a year ago, tumbling to 50.3, its lowest reading since 1951.
Released November 7, the survey shows Americans closing their wallets, canceling vacations, and shelving big-ticket purchases.
Typical readings hover in the mid-80s, but this one signals a public that’s lost faith in the economy’s direction. The last time sentiment was this low, the Korean War was still raging and most households didn’t yet own a television.
A 30% drop in confidence over 12 months isn’t just a warning sign; it’s a flashing red alert. When consumer psychology deteriorates this fast, spending dries up, and with it, the lifeblood of U.S. growth.
A Tough Act to Sustain
Despite these negative economic trends, many of today’s stock market leaders are priced for perfection—and perfection is a tough act to sustain. It’s time for investors to rediscover old virtues like diversification, valuation discipline, and cash flow.
Steady-return names deserve another look. They’re the companies that make things people actually need, regardless of interest-rate policy or AI chip cycles. Prime examples are income-oriented stocks, in such sectors as healthcare and utilities. These dividend-payers might not be cocktail-party narratives, but they hang tough when the fun stops.
The stock market’s resilience this year has been impressive, bordering on stubborn. And while there’s no rule saying the rally can’t keep going for a while longer, the higher it climbs, the thinner the air gets.
Keep your winners, trim your risk, and set aside some dry powder for when the inevitable correction hits.
Because when sentiment shifts, you want to be the one buying bargains, not the one wondering what the heck just happened. The goal now is to stay involved but play smarter.
Speaking of Playing Smarter…
If you’d like to see how some investors are earning $1,000 in reliable income every week, no matter which way the market moves, we’re conducting a live webinar that’s worth your time.
It’s part of a new project our team has been developing—something designed to generate about $4,000 a month in steady, stress-free income. You won’t find any hype or miracle claims, just a practical system for building dependable cash flow from the markets.
Our free webinar is scheduled for Thursday, November 13, at 4:30 p.m. ET. The event will be helmed by our in-house income expert, David Aquino.
Before becoming the head of options trading at Base Camp Trading, Dave Aquino worked at Merrill Lynch and the Vanguard Group as a broker and professional money manager for over 12 years.
During his career, David has developed a reputation for turning volatile market conditions into consistent income.
“Defensive growth” isn’t about treading lightly. It’s moving boldly while keeping your safety net intact. Register for David’s webinar, while space is still available. Get Your Seat Here!
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