But even as an adherent to Siegel and Bogle’s principles, the near-universal acceptance of the “stocks always go up” mantra is starting to worry me. In a memo published Tuesday titled On Bubble Watch, legendary investor Howard Marks reflected on perhaps the most prescient call of his career: an essay published 25 years ago that warned about irrational behavior in dot-com-related stocks. If enough people believe stocks are a sure thing, their price-insensitive buying can push prices higher for a considerable time, reinforcing those initial beliefs In a sense, the few drawdowns that have taken place have only reinforced the urge to go all-in on the S&P 500, because stocks have inevitably roared back. Wall Street strategists, who generally doubted the market’s potential in 2023 and 2024, have now caved to the view that the real risk is staying on the sidelines. S&P 500 trades at about 22 times blended forward 12-month earnings, a multiple that the index has only exceede...
