QVMM - Bubble Watch: S&P 500 Edition - March 5 2024

2024-03-05 15:46:00 ET

Summary

• When the stock market enjoys a strong bull run, the bubble warnings come out of the woodwork.
• Last week, Ray Dalio argued that “the US stock market doesn’t appear to be in a bubble.”.
• Kenneth Rogoff, professor of economics and public policy at Harvard University, is baffled at the stock market’s recent strength.

You can almost set your watch to it. When the stock market enjoys a strong bull run, the bubble warnings come out of the woodwork. That’s not to disparage a healthy discussion about overbought and oversold conditions. Markets go to extremes, of course, and so keeping an eye on the outlier events can be productive because current conditions provide context for estimating expected return. But obsessing over bubble talk can also lead to temporary insanity. Finding the sweet spot is the trick....

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