Just for some historical context, the media started calling the housing bubble in early 2006 and many believed it was unsustainable in 2007 (back then the janitor at my office had his real estate license and my personal trainer was selling mortgages) but the bubble didn't pop till late 2008.
Does anyone think we're not in a bubble?
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My uber driver was quoting Wall Street tulips lines talking abt the sovereign debt crisis that's going to crash the world economy. He's investing in cigarettes, bullets, and silver bullion.
I've got 10 years of dry goods and a go bag. Still working out how to transport the food when the big one hits. Any day now
I've got 10 years of dry goods and a go bag. Still working out how to transport the food when the big one hits. Any day now
I think you are good until your uber driver starts telling you to VOO and chill... then its time to panic
Mr.Milkshake said:
My uber driver was quoting Wall Street tulips lines talking abt the sovereign debt crisis that's going to crash the world economy. He's investing in cigarettes, bullets, and silver bullion.
I've got 10 years of dry goods and a go bag. Still working out how to transport the food when the big one hits. Any day now
Due to prostate removal, I will need a seperate trailer to carry my diapers/pads.
Yukon Cornelius said:
I don't think we are. People talking about and being afraid of a bubble is the antithesis to what creates a bubble. A bubble is created by capitulation to buy. Trillions in cash still on the sidelines.
People talking about bubbles often don't show any metrics indicating it either. It's all vibes and feels.
We have less publicity traded companies today then we did in 2007. Roughly a 1000 less.
We have about 3000 less publicity traded companies then in 1999.
But we have 6x the money supply. In 1999 it was 4-5 trillion. Now we have 22-23 trillion in money supply.
So less equities but more money. Especially since 2020.
Yep, there is 7 TRILLION in money markets now with a lot of that going into the market over the next year or two,. Where else can you put it to beat inflation?
There will be bumps in the road, but as a guest commentator said on Fox Business said last week, "we are in about the top of the second inning on AI and data center investments and development." Add to that the need for additional energy production and we could have an increasing growth market for a number of more years, I personally think you need to have significant money in those areas as it may be an opportunity of a lifetime,
A good financial plan has strategies for up and down markets... I.e. I was Roth converting like crazy after the "liberation day" stock dump earlier this year
Over the last 12-18 months my portfolio dedicated to this is up over 600%. And I don't think it's done yet.
"What if this really IS everything it's cracked up to be?"
If it is then none of this matters. That means societal upheaval and a rethinking of our economic system. And a LOT of near term pain by a huge swath of society.
If it is then none of this matters. That means societal upheaval and a rethinking of our economic system. And a LOT of near term pain by a huge swath of society.
Aglaw97 said:
Over the last 12-18 months my portfolio dedicated to this is up over 600%. And I don't think it's done yet.
Rich.
permabull said:
Just for some historical context, the media started calling the housing bubble in early 2006 and many believed it was unsustainable in 2007 (back then the janitor at my office had his real estate license and my personal trainer was selling mortgages) but the bubble didn't pop till late 2008.
For me it was my maintenance man was a realtor in 2005, then about 2 years later every apartment complex on camelback road in Phoenix suddenly turned into a "Condo" they were selling for about 200K a pop, for these 700 sq ft apartments
I went and talk to them for laughs basically. My credit was over 800 and they lady asks, so you normally pay your bills on time it appears. I said....meh...sometimes, I guess
She laughed, I laughed, nobody cared about that but it was a box to fill out
Aglaw97 said:
Over the last 12-18 months my portfolio dedicated to this is up over 600%. And I don't think it's done yet.
Yep. I will be running with it as long as the trend is up. I keep around 15% trailing stop losses on many of my stocks just in case something big and negative occurs.
I have been buying way out of the money Dec 2027/Jan 2028 Nvdia calls and all are up from about 200 to 400%.
I have Nvidia stock I purchased back when it was around $15 back in early 2023. What a run.
Nvidia is going to make a lot of multi-millionaires, I think the same with Tesla..just going to be farther out.
The thing about bubbles is the markets were going crazy and built on a house of cards. The housing bubble was extending credit to people to buy homes they could not afford. The dot com bubble was people throwing money at "ideas." I was in Napa, Ca during the height of the bubble and I remember talking to a husband/wife in tech and they were telling a story about a guy who wrote down an idea on a napkin and got investors.
The difference here (aside from BBAI, WWR type speculation) is many of these companies are backing it up with earnings that are exceeding expectations. Now, I have no doubt this may keep going into bubble territory but for now we are in the 4th Industrial Revolution.
The difference here (aside from BBAI, WWR type speculation) is many of these companies are backing it up with earnings that are exceeding expectations. Now, I have no doubt this may keep going into bubble territory but for now we are in the 4th Industrial Revolution.
GeorgiAg said:
The thing about bubbles is the markets were going crazy and built on a house of cards. The housing bubble was extending credit to people to buy homes they could not afford. The dot com bubble was people throwing money at "ideas." I was in Napa, Ca during the height of the bubble and I remember talking to a husband/wife in tech and they were telling a story about a guy who wrote down an idea on a napkin and got investors.
The difference here (aside from BBAI, WWR type speculation) is many of these companies are backing it up with earnings that are exceeding expectations. Now, I have no doubt this may keep going into bubble territory but for now we are in the 4th Industrial Revolution.
The Dot Com bubble had real companies with real earnings too. The small and speculative internet stocks weren't well represented in the overall market because the market caps were too low. That's not why the market corrected 50%.
Companies like Microsoft and Cisco didn't go anywhere for nearly 2 decades adjusted for inflation, due to the price. These companies always had great earnings.
I suspect Nvidia will continue to have great earnings. But it's all relative to priced expectations. Growing at far less of a pace than the market expects, with compressing margins, could evaporate 80% of its market value or more despite being a "great company".
There are a lot of speculative companies with very maniacal valutions in the S&P500 today as well - just look at Tesla trading at 350x earnings despite their earnings contracting. It's a speculative cult stock betting on the company curing cancer and flying cars to mars with robots. Ditto with Palantir trading at nearly 700x earnings. This is some pretty wild speculation and I'm always puzzled when people claim this time is a lot different from the Dot Com era. On the surface, I see far too many similarities.
Hoping you didn't also have the Munder net net fund and JDS Uniphase stock. With today's valuations being 100sX earnings, I can only laugh and remember the 90s. People are just assuming these Fund valuations will continue to infinity and beyond without knowing the history us olds remember.
So glad I went into buying land after that fiasco.
So glad I went into buying land after that fiasco.
Some interesting analysis in this WSJ article (paywall) this morning based on Shiller's "gold standard" of valuation work.
https://www.wsj.com/finance/investing/this-famous-method-of-valuing-stocks-is-pointing-toward-some-rough-years-ahead-4eb6a498?st=1HpK4s&reflink=article_copyURL_share
Some excerpts:
It is sending a clear signal: Expect paltry stock returns in coming years.
The version popularized by Nobel Prize-winning economist Robert Shiller looks back at 10 years of earnings and adjusts them for inflation to cover an entire business cycle. It recently broke above 40 for the second time ever.
The first was in 1999, and it didn't stay there long. Cyclical peaks in the Shiller P/E have coincided with negative real (inflation-adjusted) returns for stocks over the ensuing 10 years, including in 1929, 1966 and 2000.
But another case for dismissing the Shiller P/Ethat companies will just keep getting more profitablemakes no sense. Corporate taxes are now low and labor's share of economic output is too. Amid massive federal government budget deficits and an aging population, those trends can't continue and might reverse.
Something's gotta give. And, with the Shiller P/E now higher than it has been 99% of the time, it will have to be the "P" more than the "E."
The Shiller P/E isn't necessarily a timing tool and can stay elevated for a long time. Zoom out, though, and it does an impressive job of steering investors away from dangerous shoals
https://www.wsj.com/finance/investing/this-famous-method-of-valuing-stocks-is-pointing-toward-some-rough-years-ahead-4eb6a498?st=1HpK4s&reflink=article_copyURL_share
Some excerpts:
It is sending a clear signal: Expect paltry stock returns in coming years.
The version popularized by Nobel Prize-winning economist Robert Shiller looks back at 10 years of earnings and adjusts them for inflation to cover an entire business cycle. It recently broke above 40 for the second time ever.
The first was in 1999, and it didn't stay there long. Cyclical peaks in the Shiller P/E have coincided with negative real (inflation-adjusted) returns for stocks over the ensuing 10 years, including in 1929, 1966 and 2000.
But another case for dismissing the Shiller P/Ethat companies will just keep getting more profitablemakes no sense. Corporate taxes are now low and labor's share of economic output is too. Amid massive federal government budget deficits and an aging population, those trends can't continue and might reverse.
Something's gotta give. And, with the Shiller P/E now higher than it has been 99% of the time, it will have to be the "P" more than the "E."
The Shiller P/E isn't necessarily a timing tool and can stay elevated for a long time. Zoom out, though, and it does an impressive job of steering investors away from dangerous shoals
Here's a good article that supports the case AI investment is becoming a bubble and future returns of the companies making these massive investments are likely to be lower than the current euphoria suggests. Makes the point that these Mag 7 companies are increasingly shifting from "asset-lite" to "asset-heavy,' and that typically brings with it lower returns over the cycle.
You can decide for yourself, but I recommend reading the entire article. They've put some thoughtful analytics and historical similarities into it.
https://blog.sparklinecapital.com/wp-content/uploads/2025/10/sparkline-ai-capex.pdf
You can decide for yourself, but I recommend reading the entire article. They've put some thoughtful analytics and historical similarities into it.
https://blog.sparklinecapital.com/wp-content/uploads/2025/10/sparkline-ai-capex.pdf
AggiEE said:GeorgiAg said:
The thing about bubbles is the markets were going crazy and built on a house of cards. The housing bubble was extending credit to people to buy homes they could not afford. The dot com bubble was people throwing money at "ideas." I was in Napa, Ca during the height of the bubble and I remember talking to a husband/wife in tech and they were telling a story about a guy who wrote down an idea on a napkin and got investors.
The difference here (aside from BBAI, WWR type speculation) is many of these companies are backing it up with earnings that are exceeding expectations. Now, I have no doubt this may keep going into bubble territory but for now we are in the 4th Industrial Revolution.
The Dot Com bubble had real companies with real earnings too. The small and speculative internet stocks weren't well represented in the overall market because the market caps were too low. That's not why the market corrected 50%.
Companies like Microsoft and Cisco didn't go anywhere for nearly 2 decades adjusted for inflation, due to the price. These companies always had great earnings.
I suspect Nvidia will continue to have great earnings. But it's all relative to priced expectations. Growing at far less of a pace than the market expects, with compressing margins, could evaporate 80% of its market value or more despite being a "great company".
There are a lot of speculative companies with very maniacal valutions in the S&P500 today as well - just look at Tesla trading at 350x earnings despite their earnings contracting. It's a speculative cult stock betting on the company curing cancer and flying cars to mars with robots. Ditto with Palantir trading at nearly 700x earnings. This is some pretty wild speculation and I'm always puzzled when people claim this time is a lot different from the Dot Com era. On the surface, I see far too many similarities.
My FA just sent me an article that is making me rethink this (along with what I read here). I think I'm going to start to look for other investment vehicles to park my cash.
https://tandemadvisors.com/the-tandem-report/november-2025/
This blurb from your article is the crux of the situation with AI:
Heard a stat on CNBC yesterday that if not for AI we would only have seen 1/3 of the growth we've seen over the last many months (blanking on exact time frame given). The Mag 7 have been propping up the entire stock market for a few years now. This has been known and reported for a while.
It frankly baffles me that people can't acknowledge that we might be in a tech bubble (and now specifically an AI bubble).
I had a quick call with my FA yesterday on a transactional matter and made a comment in passing about some money I'm moving around and he said "you can let it sit in cash for a minute if you want to wait out this AI exuberance and let it shake out", so he's clearly attuned to it as well. I didn't have time to discuss with him but we are meeting again next week on it. Will be curious to hear his full opinion.
Quote:
The last time investors got caught in a similar bubble was during the Tech Bubble. The thesis was correct the internet changed the world. However, the price mattered. The S&P 500 was flat for nearly 10 years. That's a long time. Valuation and price ended up mattering more than the hype.
Heard a stat on CNBC yesterday that if not for AI we would only have seen 1/3 of the growth we've seen over the last many months (blanking on exact time frame given). The Mag 7 have been propping up the entire stock market for a few years now. This has been known and reported for a while.
It frankly baffles me that people can't acknowledge that we might be in a tech bubble (and now specifically an AI bubble).
I had a quick call with my FA yesterday on a transactional matter and made a comment in passing about some money I'm moving around and he said "you can let it sit in cash for a minute if you want to wait out this AI exuberance and let it shake out", so he's clearly attuned to it as well. I didn't have time to discuss with him but we are meeting again next week on it. Will be curious to hear his full opinion.
You can point to a dozen articles saying one thing, and a dozen articles supporting the opposite.
Financial advisors serve a much needed purpose, but if they were able to beat the market consistently they likely wouldn't be financial advisors.
Financial advisors serve a much needed purpose, but if they were able to beat the market consistently they likely wouldn't be financial advisors.
It's a boom, not a bubble. The collapse of the rest of the economy makes it look like a bubble. As long as unemployment and inflation keep rising, it doesn't matter.
MyMamaSaid said:
Some interesting analysis in this WSJ article (paywall) this morning based on Shiller's "gold standard" of valuation work.
https://www.wsj.com/finance/investing/this-famous-method-of-valuing-stocks-is-pointing-toward-some-rough-years-ahead-4eb6a498?st=1HpK4s&reflink=article_copyURL_share
Some excerpts:
It is sending a clear signal: Expect paltry stock returns in coming years.
The version popularized by Nobel Prize-winning economist Robert Shiller looks back at 10 years of earnings and adjusts them for inflation to cover an entire business cycle. It recently broke above 40 for the second time ever.
The first was in 1999, and it didn't stay there long. Cyclical peaks in the Shiller P/E have coincided with negative real (inflation-adjusted) returns for stocks over the ensuing 10 years, including in 1929, 1966 and 2000.
But another case for dismissing the Shiller P/Ethat companies will just keep getting more profitablemakes no sense. Corporate taxes are now low and labor's share of economic output is too. Amid massive federal government budget deficits and an aging population, those trends can't continue and might reverse.
Something's gotta give. And, with the Shiller P/E now higher than it has been 99% of the time, it will have to be the "P" more than the "E."
The Shiller P/E isn't necessarily a timing tool and can stay elevated for a long time. Zoom out, though, and it does an impressive job of steering investors away from dangerous shoals
The Shiller analysis is interesting, you can see the Shiller PE here: https://www.multpl.com/shiller-pe
But overall Shiller P/E ratio has in general, moved higher over decades. The article snippet above mentions 1929 and 1966, but we've consistently (and "successfully") seen higher Shiller P/E ratios in recent decades than what was hit in 1966. It's just a different stock market in some ways.
I barely analyze this stuff, compared to many on this board it would be near 0 analysis. But I do wonder if there is a Ponzi-ish overall uptick in valuations just due to the amount of people participating in the market, the amount of money the average person puts in the market.
We can see that the % of assets the average American has in the market pretty closely matches the Shiller P/E chart: https://www.visualcapitalist.com/american-stock-ownership-by-share-of-financial-assets/
Now I don't know what that means about future valuations though. If this is a boom and more people keep throwing money into the market it will just keep going up. I don't know if it is as easy to scare people out of the market as it maybe used to be, dollar cost averaging approach and widespread adoption perhaps contributes to more people riding it out then moving everything to cash or everything to bonds - was that perhaps more common 20/30/60 years ago?
If anyone wants a non-stop rundown of the pros and cons of AI straight from the industry and corporations, just turn on CNBC. I keep CNBC on in the background for most of the morning.
AI has been probably 75% of their content across all shows for a month now. It has completely taken the air out of the room when it comes to investment / market topics that are discussed.
AI has been probably 75% of their content across all shows for a month now. It has completely taken the air out of the room when it comes to investment / market topics that are discussed.
Complete Idiot said:
We can see that the % of assets the average American has in the market pretty closely matches the Shiller P/E chart: https://www.visualcapitalist.com/american-stock-ownership-by-share-of-financial-assets/
That's fair - agree the market is different than it's ever been for lots of reasons. The WSJ article also mentions that "Starting in 1990 instead, when computers and CNBC were around, is fairer. The average since then has been 27 times."
The market fundamentally changed in the 90s with retail mutual funds, then again in the last decade with ETFs.
so the argument is the concentration of stock purchases in the MAG 7
once that ride stops- why wouldn't the same money in the MAG 7 then spread out towards the other 493 stocks in the S&P?!
so yea, if you have EVERYTHING in Amazon you will take a huge haircut
but if you are diversified then Pharma or Real Estate will start to explode higher as buyers rotate into other sectors.
once that ride stops- why wouldn't the same money in the MAG 7 then spread out towards the other 493 stocks in the S&P?!
so yea, if you have EVERYTHING in Amazon you will take a huge haircut
but if you are diversified then Pharma or Real Estate will start to explode higher as buyers rotate into other sectors.
LMCane said:
so the argument is the concentration of stock purchases in the MAG 7
once that ride stops- why wouldn't the same money in the MAG 7 then spread out towards the other 493 stocks in the S&P?!
so yea, if you have EVERYTHING in Amazon you will take a huge haircut
but if you are diversified then Pharma or Real Estate will start to explode higher as buyers rotate into other sectors.
Wouldn't that happen after the haircut and less money is spread into the other 493?
jamey said:LMCane said:
so the argument is the concentration of stock purchases in the MAG 7
once that ride stops- why wouldn't the same money in the MAG 7 then spread out towards the other 493 stocks in the S&P?!
so yea, if you have EVERYTHING in Amazon you will take a huge haircut
but if you are diversified then Pharma or Real Estate will start to explode higher as buyers rotate into other sectors.
Wouldn't that happen after the haircut and less money is spread into the other 493?
good point- but we are talking about the supposedly 7 Trillion dollars "on the sidelines" waiting for the oncoming crash
so even if they were scared off to buy the MAG 7 they could still pile into pharma, real estate, walmart, energy.
The 7 trillion on the sideline myth needs to stop. That money is largely used as collateral, earning a safe minimal reward while doing so. Large money on the sideline is also not usually a precursor to that money moving into the market BEFORE a significant correction.
All That Cash on the Sidelines Probably Isn't Going to Do What You Think It Will - TheStreet Pro
All That Cash on the Sidelines Probably Isn't Going to Do What You Think It Will - TheStreet Pro
Heineken-Ashi said:
The 7 trillion on the sideline myth needs to stop. That money is largely used as collateral, earning a safe minimal reward while doing so. Large money on the sideline is also not usually a precursor to that money moving into the market BEFORE a significant correction.
All That Cash on the Sidelines Probably Isn't Going to Do What You Think It Will - TheStreet Pro
I'm one of the ones in this article. This is me:
Quote:
Historically, cash on the sidelines hasn't propelled stocks higher; it has been a sign of old money, or maybe smart money, practicing risk aversion to extended bull markets.
I have 2 years of cash in our online savings account and have since 2023. It's there because of above quote and to cushion us transitioning from full-time corp gigs to early retirement. I have zero intention of investing it.
permabull said:
Just for some historical context, the media started calling the housing bubble in early 2006 and many believed it was unsustainable in 2007 (back then the janitor at my office had his real estate license and my personal trainer was selling mortgages) but the bubble didn't pop till late 2008.
I remember the same thing. In my case, my barber started flipping houses.
Back in the late 90s, coworkers started bragging about their stocks; they never invested before.
Warning signs were clear in both dotcom and GFC, but pinpointing the peak was impossible though.
I think the retail investor today is much, much more common than 25 years ago. Tech has enabled just about anyone to easily open an account and participate in the market. Everything from mobile apps to ETFs and 'slices' of shares. I also agree with the point that the passive investing machine (crediting Vanguard) is undoubtedly contributing to the higher P/Es by just having more capital in the market.
It's just really difficult to call this a bubble like dot com or the real estate bubble of ~2007ish. In the end, I think this is a frothy period that will eventually have a down cycle (e.g. 20-30% drop) at some point vs. a dot com crash or mortgage crash that kicked off the 'bust' of '08/09. Heck, we had a near 20% decline in the S&P500 from Jan 1 to Apr 7.
It's just really difficult to call this a bubble like dot com or the real estate bubble of ~2007ish. In the end, I think this is a frothy period that will eventually have a down cycle (e.g. 20-30% drop) at some point vs. a dot com crash or mortgage crash that kicked off the 'bust' of '08/09. Heck, we had a near 20% decline in the S&P500 from Jan 1 to Apr 7.
Quote:
According to economist David Rosenberg, the stock market is in a "classic price bubble" characterized by inflated valuations, a disconnect from economic fundamentals, and concentrated gains in a few large technology stocks. The "Rosenberg stocks price bubble" refers to this market observation made by Rosenberg, not a bubble tied to a company of that name.
Rosenberg's view on the bubble
- Disconnect from fundamentals: Rosenberg notes that stock prices are rising despite negative fundamental factors, such as higher-than-expected initial jobless claims and weakening payroll growth, suggesting the market is in a "euphoric state".
- Concentrated gains: A small group of large-cap technology stocks, often called the "Magnificent Seven," have driven the majority of market gains, causing the S&P 500 to function like a mega-cap growth index. This concentration is higher than during the dot-com bubble.
- Comparison to past bubbles: Rosenberg, who correctly predicted the 2000 tech bust and the 2008 financial crisis, draws parallels to previous bubble periods.
- AI spending: The AI investment boom is a key factor fueling the current speculative environment, with some firms possibly relying on external financing for large AI projects.
- Predicted duration: As of early November 2025, Rosenberg has cautioned that the bubble could persist for up to two more years.
Yukon Cornelius said:
Name one classic sign..
Like I've said above if your model is not accounting for the exponential growth of money you're likely wrong. I haven't seen any metrics showing how or why this is a bubble. Only opinion pieces.
If you look at market cap divided by GDP, it's way overvalued and in bubble territory. That "normalizes" the money supply and mitigates the point you made about number of companies, etc... People are not just investing in stocks, which is what you seem to imply by noting the money supply, i.e. the price of stocks have gone up and have a new mean PE because there is more money chasing stocks. People are also buying stuff with that money too. That is reflected in GDP.
Logos Stick said:Yukon Cornelius said:
Name one classic sign..
Like I've said above if your model is not accounting for the exponential growth of money you're likely wrong. I haven't seen any metrics showing how or why this is a bubble. Only opinion pieces.
If you look at market cap divided by GDP, it's way overvalued and in bubble territory. That "normalizes" the money supply and mitigates the point you made about number of companies, etc... People are not just investing in stocks, which is what you seem to imply by noting the money supply, i.e. the price of stocks have gone up and have a new mean PE because there is more money chasing stocks. People are also buying stuff with that money too. That is reflected in GDP.
I'm sure you know this, but they call that metric the Buffet Indicator. There's a link to it below.
They used to update it monthly but have slow-played it because it's gotten crazy high. Approaching 3 standard deviations from trendline. To be clear, they acknowledge a trendline concept that recognizes things can change over time. Even with that, this metric is off the charts.
https://www.currentmarketvaluation.com/models/buffett-indicator.php
How does that ratio normalize the money supply? Can you show the actual numbers?
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