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The highest-valued stock in the S&P 500, based on this year’s expected earnings, is not Inc., Netflix Inc. or any other member of the FANG bloc. In fact, none of the tech megacaps, which also include Facebook Inc. and Google parent Alphabet Inc., even rank in the top 10.

Hess Corp., an 85-year-old oil company, with a forward P/E of 929.6, is No. 1 on that list. The highest-ranked FANG stock is Netflix at No. 11.

Mary Callahan Erdoes, head of JPMorgan Chase Inc.’s asset-management division, said at a hedge fund conference last week that the market was not as richly valued as it looks. Take away tech stocks, and the rest of the market is cheap, Erdoes said. She got no argument from her other panelists. The comment plays into the general perception that compared with everything else, technology shares, and particularly the FANG stocks, are widely overvalued. That is not really the case, though.

The S&P 500 has an overall P/E ratio, based on the past 12 months, of 24.9, according to S&P Global Inc. Exclude the FANG stocks and the P/E drops to 24.6. So Facebook, Amazon and the rest of the bunch do make the market more expensive, but not by much.

The reason is twofold. First, the rest of the market still looks expensive. The average of the trailing P/E of the S&P 500, going back to 1960, is 19.2, according to Bank of America Merrill Lynch. Second, the FANG stocks, as a group, are not as expensive as many perceive.

Shares of Netflix and Amazon do trade at high multiples, based on this year’s earnings, of 91.2 and 79.5, respectively. But the rest of the FANG do not. The P/Es of Alphabet and Facebook are high, at 23.4 and 22.8, respectively, but not higher than some 133 other S&P 500 stocks, including YUM! Brands Inc., Costco Wholesale Corp., Mastercard Inc. and Estee Lauder Cos. Apple Inc., which is often grouped in with the FANG stocks and has the largest weighting of any member in the index, has a trailing P/E ratio of 18.5. Take Apple out, and the valuation of the market goes up.

And while the FANG stocks have been grouped together, they actually represent vastly different investments. Netflix and Amazon trade on the idea that the two companies will be able to drastically increase their earnings by taking over their respective industries, home entertainment and retail. (Put aside for now the fact that Amazon wants to take over home entertainment as well.) Investors in Apple, though, are betting on the iPhone maker’s dominance of its market and the likelihood that it will continue to return more and more of its huge cash pile. It’s an investment thesis more similar to Erdoes’s JPMorgan Chase and the other big banks than it is to the rest of the FANG.

What I think people like Erdoes and others are talking about when they say technology stocks are making the market look expensive is momentum. And it’s true that outside of technology stocks, the market has little momentum this year. Tech stocks are up 16 per cent. The ProShares S&P 500 Ex-Technology ETF, on the other hand, is up just 1.6 per cent.

What’s also true is that the market, with shares generally struggling this year and earnings rising rapidly, thanks to the tax cuts, looks cheaper than it has in a while. But that doesn’t mean stocks, especially in light of a possible trade war, are actually all that cheap. And that remains the case, even with tech blinders on.

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