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Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better.

Today's Issue Read Time: <2 minutes

• Lesson: The run-up in AI stocks
• Timeless Content: Are we in a melt-up?
• Stock Dive: A full breakdown of Broadcom, Inc.
• Resource: Human drivers keep crashing into Waymos​

Friends,

You have witnessed one of the most amazing short-term runs for the stock market...ever! Between March 30th and May 14th, the S&P 500 rose an astounding 19%. That's two years' worth of returns in just over one month!

The market has only had better runs twice:

• The Great Recession: Starting on March 9, 2009, the market rose 26% over the same 32 trading days.
• COVID Onset: Starting on March 23, 2020, the market rose 29% in 32 trading days.

And for those who are worried that the current run could end soon, chew on this:

• In 2009, the run lasted nearly 14 months, increasing 80% before having its first major (10%+) pullback.
• In 2020, the run lasted 21 months, increasing 115% before pulling back.

One caveat, however, was that in both cases, the market had plunged much more (57% and 34%, respectively) prior to its run. This year, the market was only down 10% on the Iran War before rebounding.

And if you're an investor in computer chip stocks, you're feeling really good: the iShares Semiconductor ETF (SOXX) was up 72% during this short time.

But while this run has been amazing, there's a word of caution we want to throw out there. We'll start with a Warren Buffett quote from his 1993 letter to shareholders:

Because demand for just about everything in the AI Infrastructure chain (chips, energy, hyperscalers, connectors, etc.) is well ahead of supply, just about ALL of these stocks are going up and to the right.

That will continue as long as there's an imbalance. But right now, they're ALL being bid up, with little concern for their competitive advantages. In Buffett's parlance, the naked (no moat) and clothed (with a moat) swimmers are all out there together.

Eventually, however, supply and demand will come into balance. We have no idea if that will happen in one month, one year... or one decade. But when that time comes, having a moat will matter enormously -- your downside will be protected.

That's why -- while we heartily celebrate the gains many are enjoying -- we want them to be sure the moat around those companies is as strong as ever. Over the long run, that will help you keep these gains -- and make your life as an investor much more enjoyable.

Wishing you investing success,

Brian Feroldi, Brian Stoffel, & Brian Withers Long-Term Mindset

One simple graphic

One piece of timeless content

The market has been on fire lately. Are we in a "great melt-up? Graham Stephan's posts on what that term means and how the recent market compares with similar periods in history.

One resource

When every Waymo fender-bender makes the news, but the 16,000 daily human crashes don't, your brain quietly rewrites the odds. Understanding AI dug into all 78 crashes Waymo reported over 7 months — the headline tells you everything: Human drivers keep crashing into Waymos.

One Stock Dive

​Fiscal.ai has enabled premium users to generate AI-powered stock research reports. This week, Broadcom, Inc. (NASDAQ: AVGO) which designs, develops and supplies semiconductor and infrastructure software is up.

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