Derek Hodnett

[Porter Stansberry @porterstansb]

Junk stocks just beat quality stocks by the widest margin on record. And that is now reversing.

Investors had better know what that means. 👇

From November 2023 through June 2026, a portfolio that owned the highest-quality U.S. businesses and sold short the lowest-quality ones lost 36%. That is the worst drawdown since AQR's record begins in 1957 (AQR data).

Why does this matter?

Quality earns a persistent premium because the market underprices it. In Asness, Frazzini and Pedersen's research, a one-standard-deviation rise in quality lifts a stock's price-to-book by only 22%. Since 1957, quality has beaten junk by about 3.6% a year.

The quality-minus-junk spread is an objective test of whether the market is behaving rationally.

When quality wins, high prices can still be rational. When junk wins at record highs, investors have lost their discipline.

From 1996 through 1998, quality beat junk by 33% while stocks soared: expensive but rational.

From January 1999 to February 2000, junk won by 12%. Over the next two years, quality beat junk by 68% while the market fell 24%.

The 2020–21 mania followed the same pattern. Junk beat quality by 19% from December 2019 through January 2021. Over the next two years, quality won by 41%.

Today's junk run is bigger than both.

It is three times the 1999 episode and nearly twice the 2020 one. The 12 months ending May 2026 were the worst on record for quality.

Goldman's basket of money-losing tech stocks was up 57% by June 1. That's the definition of market excess / delusion. Other signs: the Shiller CAPE ratio is 40.7, a level exceeded only in 1999 and 2000.

But, there's a reckoning happening right now.

In July 2026, quality beat junk by 14.3%, its largest monthly gain since 1957.

The next two largest win months for quality were November 2000 and October 2008.

The Fed raised rates on September 16 for the first time since 2023, and the 10-year Treasury yield closed above 5%, its highest since 2007. Stocks are expensive, and by this test the market has been irrational since late 2023.

Hell is coming.

[Blaine Kellar @sports_bk]

Beech center @CutterSisk and JPII point guard @TreyPearson_2 have been nominated for the McDonald’s All-American Games.

If selected to play in the game, they will be Sumner County's first All-American since Corey Brewer.

https://t.co/g8zCMSll3k

[Derek Hodnett @boscobjh120339]

@ChipotleTweets I have been the biggest fan of Chipotle for years...at least 12 years. Now with meat portion sizes shrinking and even worse not even close to what the bowls are advertised I am done with @ChipotleTweets bowls until you make bowls that match marketing

[Allie Beth Stuckey @conservmillen]

In the end, it wasn’t the “soft presence” Christians who sparked the revival. It was the bold ones— those who boldly persisted in telling the truth and pushed relentlessly against the darkness in our culture.

[Allie Beth Stuckey @conservmillen]

For years and years we’ve heard that Christians who advocate for conservative policies and support Trump are pushing people away from the church. Let the record show: the opposite is true.

[College Football Report @CFBReport]

The real Death Valley:

[Mario Nawfal @MarioNawfal]

🇺🇸 GOV. DESANTIS RIPS PROPERTY TAXES: “IS IT REALLY YOUR LAND?”

Florida Gov. Ron DeSantis questioned why Americans keep paying taxes on homes they have already bought.

DeSantis:

"You buy a home, you buy land... and then, you've been taxed many times [on that]...

Is it your property or not?

Just for being on your property, you've got to write a check to the government every year?"

Source: @EricLDaugh

[LSU Baseball @LSUbaseball]

Eight Is Great

[Greg Harvey @BetweenTheNums]

LSU (@LSUbaseball) is the first D1 baseball program to win multiple National Championships in three different decades: 90s, 2000s & 2020s.

[LSU Baseball @LSUbaseball]

#NewProfilePic

[Tre Morgan @tremorgann]

NO ONE more deserving!! Go win it all!

[LSU Baseball @LSUbaseball]

#ThePowerhouse is headed back to the CWS Finals

[Southeastern Conference @SEC]

GEAUXIN' TO THE SHIP 🚨

@LSUbaseball x #MCWS

[Albert Mohler @albertmohler]

Christian friends, please pray as I preach tonight to a special service honoring battle-scarred first-responders in Los Angeles area. My assigned message: “Why Would a Good God Allow Devastating Fires?” May God use this event to draw the lost to Christ. Thanks for praying.

[Derek Hodnett @boscobjh120339]

@JoeSquawk Unbelievable & Thank You for continuing to live up to the standard of calling out Anthony when he wanted to sweep it under the rug. Exactly what we as Americans wanted you to ask. Keep up the great work!

[Mark W. Yusko - Two Point One Quadrillion @MarkYusko]

I have seen a pinned tweet to this point somewhere… 😉🧡

Non Consensus = #Edge

[Gareth Soloway @GarethSoloway]

3 Charts That Will Shock You, Trade Alerts, Stocks, Crypto, Gold and Silver https://t.co/GBcRSqIA6e

[Albert Mohler @albertmohler]

I hope and pray that Kentucky voters support the defense of unborn life and choose Daniel Cameron as our next Governor. The issues are clear. On the issue of abortion alone, the choice is clear—and on so many other issues as well. We need @DanielCameronAG as KY governor.

[Brian Kelly @CoachBrianKelly]

What a game! Congrats to @LSUCoachJ and the Tigers on heading to the Finals.

Geaux Tigers!