This is the Dumbest Stock Market in History.
– Brett Arends, Market Watch
Since our last commentary addressing the possible “overvaluation” of the stock market, U.S. stocks just keep going up, and it seems that many investors are at a loss to understand why.
Over my 32 years as a professional wealth advisor, I’ve found that great markets often give rise to lots of investor skepticism. Many investors simply can’t understand why the market is rising and therefore can’t believe it. You even see money managers and pundits on TV talking about how the current growth is unrealistic, fake, or not to be trusted.
This trend often leads financial journalists, pundits, and money managers to become downright angry, sometimes even ridiculing investors for being “so dumb” as to drive stock prices higher.
This month I came across an article published by a periodical called MarketWatch, entitled “This is the Dumbest Stock Market in History.” In it, the author angrily rebukes “the crowd” of stock market investors for being so stupid to continue pouring money into this crazy overvalued market. The article makes the same argument that it seems everyone in the financial media are making today:
- The stock market is wildly overvalued.
- That overvaluation is being driven by reckless speculation in the new technology of Artificial Intelligence.
- This combination makes today’s market identical to the tech bubble of the late 1990’s, when speculation in internet stocks drove the market to massive overvaluation
- Just like the internet bubble of 2000, today’s market is hanging on the precipice of a major crash. Investing in stocks today is a “death wish.”
Please check out our latest video, in which we discuss this historical comparison and whether it is the most appropriate historical period to compare with today’s conditions. Importantly, we also offer some thoughts on the effectiveness of using history as a predictive tool in the first place.
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