How The Bubble Manipulates Time

2026-01-05 09:32:00 ET

I’m going to tell you a story. At first, it’s going to sound ridiculous. But the longer I talk, the more rational it’s going to appear… This isn’t the first time we’ve had this conversation, ok? That’s because you’re stubborn. You won’t believe me when I tell you that Dr. Carter was right, that the enemy can manipulate time. The invasion will fail. No matter how many times we have this conversation, you refuse to accept that the enemy breaks through to London tomorrow, and we lose, we lose everything… You’re not mentally equipped to fight this thing, and you never will be.

– Major William Cage (played by Tom Cruise), Edge of Tomorrow

We’ve seen the future. Again and again. Market valuations have reached similar extremes twice before in the U.S. financial markets – in 2000 and 1929 – along with lesser extremes in 2007 and 1972 and sector-specific extremes like the “-onics -tronics” boom ending in 1970. These, joined by numerous speculative episodes across other countries and other markets, tell us how the bubble will end. This episode has extended longer than usual – below we’ll examine the specific wrinkles that have contributed.

The defining feature of every bubble is the same: a growing inconsistency between the long-term returns that investors expect in their heads – based on extrapolation of the past, and the long-term returns that properly relate prices to likely future cash flows – based on valuations . Every bubble smuggles the same tragic past into the same tragic future by packaging it with new wrinkles that convince investors that “this time is different.” Ultimately, they still end the same way....

Read the full article on Seeking Alpha

For further details see: