We keep hearing US stocks are bubbly. Are they?
No, says money manager Barry Ritholtz. There are some signs of “bubblicious activity”, but this “seems less like a bubble and more like a later-stage bull market cycle”. All bulls, he notes, “run further, longer and higher than most expect”.
Billionaire money manager Cliff Asness agrees stocks are expensive but using “the ‘B’ word” is premature.
Meanwhile, Acadian Asset Management’s Dr Owen Lamont says there is an AI boom, but not an AI bubble. Bubble signs would include a wave of AI firms going public; AI companies going on an “acquisition binge, using their own shares as currency”; and mega-cap tech giants stopping share repurchases. These elements were present during the dotcom bubble, but Lamont is “not seeing it” today.
READ MORE
Ritholtz, Asness and Lamont are no perma-bulls. Each called out market excess in the past, during the dotcom bubble (Asness, Lamont) and before the global financial crisis (Ritholtz).
Besides, even if there is a bubble, when do you sell and buy back in? There is “not a single” timing strategy, notes valuation guru Prof Aswath Damodaran, that has consistently boosted annual returns over the past 50 years.
Anyway, Damodaran doesn’t see a bubble. Stocks look “richly priced”, but rich “does not equal bubble”.
The moral: investors should temper expectations, not assume imminent collapse.
