I know no one knows, but I wonder if we these pullbacks are signs of a potential collapse. Once enough investors are of this opinion, "Mr. Market" will drive the collapse even if corporate fundamentals are strong. The lack of government data, the shutdown itself and the numbers that are trickling out are cause for concern. The comments by Powell questioning the interest rate cut don't help either.

I think we get a bump if and when the morons in Washington end this shutdown.

MemphisAg1 said:

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Logos Stick said:

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Yukon Cornelius said:

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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.

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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.

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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

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They just updated the Buffet metric as of Sep 30. Today's S&P 500 is similar to its value on Sep 30. Quote below from the site:

Quote:

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This ratio fluctuates over time since the value of the stock market can be very volatile, but GDP tends to grow much more predictably. The current ratio of 230% is approximately 76.62% (or about 2.4 standard deviations) above the historical trend line, suggesting that the stock market is Strongly Overvalued relative to GDP.

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Seems like everyone is still denying we are in a bubble, despite all the chatter on the topic. A major crash into EOY or early next year would be very unexpected.

Quote:

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A key point that the conventional wisdom overlooks is that it is the 10-year Treasury bond yield rather than the Fed's short-term interest rate that is the most relevant both for the economy's performance and for discounting a company's earnings stream for valuation purposes. This means that if aggressive cuts in the Fed's interest rate cause the long-term bond market yields to spike, that could be a trigger for the bursting of the stock market bubble.

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https://www.aei.org/economics/when-will-the-stock-market-bubble-burst/

BREAKING: The $610 Billion AI Ponzi Scheme Just Collapsed

Last night at 4pm EST, something unprecedented happened. Nvidia stock rallied 5% on earnings, then crashed into negative territory within 18 hours. Wall Street algorithms detected what humans couldn’t: the numbers don’t… pic.twitter.com/uW4UL5eQ8F

— Shanaka Anslem Perera ⚡ (@shanaka86) November 20, 2025

That gives me some anxiety.

They were talking about the $14b cash vs $19b in profits. I am not familiar with how chip companies depreciate assets but I think the depreciation is what Burry was centering some of his arguments around. If Nvidia is overstating depreciation vs it's peers, then they will have a larger gap between cash vs earnings. Maybe this is the proof?

Edit* Yeah don't listen to me.

aggiebrad16 said:

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That gives me some anxiety.

They were talking about the $14b cash vs $19b in profits. I am not familiar with how chip companies depreciate assets but I think the depreciation is what Burry was centering some of his arguments around. If Nvidia is overstating depreciation vs it's peers, then they will have a larger gap between cash vs earnings. Maybe this is the proof?

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Just a clarification... Burry says they are understating depreciation expense by claiming a longer-than-real actual life of the infrastructure.

Anyone else buying puts per Burry?

Well there you have it sports fans.

For what's it worth, Goldman Sachs does not think we are in a bubble.

PE ratios for the FANGMANT Aggregate are quite lower than the largest companies in the Tech Bubble Aggregate and slightly lower than the Nifty-Fifty Peak. Latter of which was IBM, Eastman, Sears, Xerox, 3M and Procter & Gamble, back in the day.

That's just the one metric they are looking at though.

YouBet said:

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For what's it worth, Goldman Sachs does not think we are in a bubble.

PE ratios for the FANGMANT Aggregate are quite lower than the largest companies in the Tech Bubble Aggregate and slightly lower than the Nifty-Fifty Peak. Latter of which was IBM, Eastman, Sears, Xerox, 3M and Procter & Gamble, back in the day.

That's just the one metric they are looking at though.

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If we were in a bubble, the last to admit it would be the institutions most heavily invested to the upside in it. Just FYI.

Goldman Sachs was right about the housing market in 2008 as well, right?

Yea, this is just not true. Bitcoin does not track AI speculation and AI companies don't hold $29 billion of bitcoin.

He literally just made all that up.

TxAG#2011 said:

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Yea, this is just not true. Bitcoin does not track AI speculation and AI companies don't hold $29 billion of bitcoin.

He literally just made all that up.

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It absolutely tracks the Nasdaq, propped almost entirely by AI, except times like this where it leads it as the first risk off asset.

Heineken-Ashi said:

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YouBet said:

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For what's it worth, Goldman Sachs does not think we are in a bubble.

PE ratios for the FANGMANT Aggregate are quite lower than the largest companies in the Tech Bubble Aggregate and slightly lower than the Nifty-Fifty Peak. Latter of which was IBM, Eastman, Sears, Xerox, 3M and Procter & Gamble, back in the day.

That's just the one metric they are looking at though.

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If we were in a bubble, the last to admit it would be the institutions most heavily invested to the upside in it. Just FYI.

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Yes. I take everything they put out with grain of salt after they were shocked by inflation despite the trillions of money that was printed.

They at least have a chart for this one.

The dotcom bubble was also followed up by a quarter trillion in fraud from Enron and Worldcom I think. And the regulatory environment is very different now than back then.

Here's a good article that doesn't try to absolutely say if we're in a bubble or not, but makes several good points to think about.

https://oilprice.com/Energy/Energy-General/The-AI-Power-Surge-Could-End-Badly.html

permabull said:

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I saw an interview with Morgan Housel this morning and he mentioned consumer confidence was at its highest right before the dot com bubble, then again before the 2008 crash, and again before COVID, and again before the inflation downturn of 2022. Right now confidence is relatively low, similar to the beginning of 2023 when everyone was calling for another down year after 2022. I can't find concrete numbers but it appears it was also pretty high in the 80s before Black Monday.

No one knows when the next major correction will happen but it appears if it happens soon, it will be unprecedented because it will be the first time in my life it happened while everyone was predicting it.

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great point

also, U of Michigan consumer confidence is at years long LOWS not highs.

Vix was elevated

EXTREME FEAR of 7 the past week in the market on the metric reading.

so if anything, EVERYONE is worried about their being a bubble.

which based on history means this is not a time of irrational exuberance.

I listened to this podcast over the weekend and Cliff Asness was talking about if we were in a bubble. To paraphrase his view, by his metrics the market is expensive but no near a bubble. He made a good point that for an investment manager, you might get to see two bubbles over an entire career, and they won't be identical.

https://podcasts.apple.com/us/podcast/odd-lots/id1056200096?i=1000736563747

Suppose that is how it plays out. Where is your money really going to be safe? Nowhere is the likely answer.

Heineken-Ashi said:

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I'll keep saying it. It's not a stock bubble. It's not a real estate bubble. It's a Sovereign debt bubble mixed with a private credit bubble. Fundamentals look fine. Traditional economic indicators look weak but not catastrophic. But that's because the money has been inflated to extremes. The inflation seen in assets looks ok comparatively. But this is like a house with a solid foundation built on quicksand. It doesn't take much moisture to trigger the collapse. And even with everything seemingly healthy, when the ground collapses under you, it pulls everything with it.

I've said before that what is likely coming down the chute is a rise in the purchasing power of the dollar (deleveraging) coupled with rising interest rates. Go ahead and find a time in modern history where those happened together. It doesn't exist because we've never before had this combo of unsustainable debt and overleveraged credit.

So it's not going to look like 1929, 1970's, 2000, 2008, 2020, 2022. The decade we are about to go through is going to be a FIRST of its kind. Everyone looking backward for clues is looking in the wrong place.

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H-A...

Your scenario sounds a bit like deflation. Correct me if I am wrong. I understand the why of de-leveraging and higher interest rates. I guess I'm a bit unsure on how we get there if Trump is asking/demanding the Fed, whoever that might be, to lower interest rates and keep money cheap. I guess we could eventually get there with a heavy reality check; we're forced to finally face the music on runaway debt levels. No doubt that the average Joe and Jane Q. Public are going to get severely punished in the process, but it may not be much worse with the inflation they'd experience via a consistently debased currency.

I really don't know. I've tried in the past to create a narrative that makes sense. But all that does is get your mindset, narrowed and keeps you from being successful in the environment that you are currently in. But it is possible to have a high interest rate deleveraging. Remember that deflation means money supply being sucked out of the system. Fewer dollars chasing the same goods and assets. With money supply shrinking, but the assets structurally sound and possibly even growing in quantity, everything has to be repriced lower to reflect the lower amount of money in the system. And with money supply shrinking, that's less money going overseas, meaning that the participants in our bond market are demanding a higher and higher return to take the risk of holding our declining in value assets, which includes treasuries.

If this happens, it's not gonna happen in a straight line. You'd probably be looking at a decade or longer as this works through the global system. There would probably be years of structural strength in between from supply shocks, central bank attempts to interfere, hopeful growth, in certain sectors, etc. But the one thing you can almost guarantee will be on your bingo card will be a banking crisis. Maybe that's the first domino to fall based on their over leveraging into private credit and Shadow banking, and maybe that's the second domino after something else tips it off.

But something like this doesn't happen because the banks and the central banks aim for it to happen. It happens despite their efforts to prevent it. This administration is full tilt attempting to inflate out of the debt problem. But that's creating structural issues in abundance. At some point, Keynesian economics runs into a wall where there's just no demand for new loans that would expand the money supply further. We don't really have any history to look at to compare this too, because we've only been in this debt cycle that was pushed to overdrive since the mid 2000s. The briefest taste was in 2022. Maybe think of that but instead of lasting a year, it lasts a decade.

Heineken-Ashi said:

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Think of commercial real estate. Billions in loans at low interest valuations are sitting on bank balance sheets. I can tell you from experience, many of these properties are not worth their loan value. But the balance sheets aren't marked to market.

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Please educate us on this. It's been my observation in business since Sarbanes Oxley passed after the Great Recession that mark-to-market is a key requirement of any company that is publicly traded and independently audited. It causes unexpected variances (up or down) frequently, but it keeps things tethered to reality.

Most banks -- especially by loan volume -- are publicly traded. I don't see how they can hide from this mark to market requirement.

MemphisAg1 said:

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Heineken-Ashi said:

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Think of commercial real estate. Billions in loans at low interest valuations are sitting on bank balance sheets. I can tell you from experience, many of these properties are not worth their loan value. But the balance sheets aren't marked to market.

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Please educate us on this. It's been my observation in business since Sarbanes Oxley passed after the Great Recession that mark-to-market is a key requirement of any company that is publicly traded and independently audited. It causes unexpected variances (up or down) frequently, but it keeps things tethered to reality.

Most banks -- especially by loan volume -- are publicly traded. I don't see how they can hide from this mark to market requirement.

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Mark to market real estate values. They have the market value as higher than it would trade in the open market today. It shows DSCR and debt yield as still a healthy % of value. In reality, if the properties had to be sold today, many of them would trade under their loan value. Like I said, they have been doing extend and pretend, especially of those floating rate bridge loans originated between 2020 and 2023.. because..

1. The banks don't want to play manager of properties.
2. The common thought is that rates would come down and allow groups to refinance. Some equity would be lost, but the banks would get their loan value back.

The majority of properties in this predicament that have tried to sell have been rejected by the market. The equity is already gone. The banks are holding on to hope that the FED is going to slash rates and there will be a rush to buy. This hope has been lingering for 2+ years.

Japan trying to raise interest rates again...

Yen Carry Trade implosion is still on my 2025 bingo card

Some additional perspective. I take these articles with many grains of salt, but they're still thought provoking on the topic of a potential bubble.

https://www.carlyle.com/carlyle-compass/ai-compute-market-price-analysis

https://www.barrons.com/articles/ai-spending-corporate-profits-might-burst-a3d50f08?st=6Tob6t

The devaluation of the dollar has made everything we buy and invest in seem too expensive. The end of QT and lower interest rates should result in increased liquidity and high prices for both goods and investments. It's not that land and gold and stocks are that much more valuable, it's that the dollar is that much less valuable..