We’re probably not in a bubble, at least not yet.
Market Reaction to Iran Attack Tells Us Stocks Aren’t in a Bubble
Markets aren’t entirely irrational.
In a bubble, bad news is typically either ignored — as belief in the near-magical power of tulips/railways/websites/electric cars/green tech overcomes all obstacles — or has a huge impact as it threatens to force investors to revert to looking at traditional valuation tools.
Logic has little place in a market that’s floating on nothing.
The scale of the selloff was also small.
Sure, the S&P 500 had its biggest drop in a day since January. But a near-1.5% drop once every three months is nothing, and really nothing compared with what happens in a true bubble.
Investors moonstruck by the possibilities of artificial intelligence have pushed some smaller AI firms to similar silliness, while increased trading in options by individuals is another sign of excess.
James Mackintosh Wall Street Journal 16 April 2024
The joy of writing about markets is the struggle to piece together a puzzle with moving parts.
James Mackintosh WSJ 29 September 2023
https://englundmacro.blogspot.com/2023/09/james-mackintosh-joy-of-writing-about.html
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