The Everything Bubble

[mattee2264]

Problem though is that even a safe 6-7% is very boring and unattractive to most investors who always look in the rear window mirror when it comes to projecting future returns and over the last 5 years you'd have made over 25% a year investing in the Nasdaq and almost 15% a year investing in the S&P 500. And investors aren't worried about losing money because they figure the Fed will rescue markets at the first sign of trouble. 

 

Bull markets do not end because investors decide bonds offer a better risk-reward. They end because sentiment shifts and investors are more worried about losing money than anything else. That is probably why stagflation is the greatest worry because it could conceivably prevent the Fed from rescuing markets and might even require them to increase rates as well as being a serious headwind to earnings. 

[Dinar]

6% from a bond is essentially zero return after tax and inflation.  So while TIPS at 2.5% are attractive in a retirement account, they are not attractive to a tax paying individual

[mattee2264]

Institute of International Finance recently stated that global debt (governments, consumers, businesses) is $315TR. That compares to global GDP of $109.5TR. 

 

Maybe it is nothing. But there probably is a link between massive accumulation of debt since 2010 and the incredible global stock market performance. And if interest rates stay high or there is a rise in unemployment or a fall in corporate profitability or bond vigilantes start disciplining governments running unfunded deficits then it probably will start to matter in a big way. 

[Luke]

1 hour ago, mattee2264 said:

Institute of International Finance recently stated that global debt (governments, consumers, businesses) is $315TR. That compares to global GDP of $109.5TR. 

 

Maybe it is nothing. But there probably is a link between massive accumulation of debt since 2010 and the incredible global stock market performance. And if interest rates stay high or there is a rise in unemployment or a fall in corporate profitability or bond vigilantes start disciplining governments running unfunded deficits then it probably will start to matter in a big way. 

Cash will always be trash! 

[Blake Hampton]

11 hours ago, Luca said:

Cash will always be trash! 

I’m starting to think more-so fixed income

[fareastwarriors]

[winjitsu]

Meanwhile:
 

Lets not forgot other favorites like $OKLO $QUBT $RGTI, 100s of DAT companies
 

Adjusting for inflation, we should be past 2021 in terms of retail flows. 

Edit: One More

Edited October 10, 2025 by winjitsu

[thowed]

Really feels like some 2021 rhyming & no idea when it will stop.

 

Part of me wonders if will last the year, like then, and I should look at buying index Put hedges round about then. But oof who knows.

[brobro777]

Maybe silver is doing one of those blow off top thingy today after hitting $50

 

maybe

 

 

 

[WayWardCloud]

Is this the new "have we hit the top" thread? 

[MungerWunger]

What's the 2025 equivalent of 2021's monkey and rock jpgs

[brobro777]

1 hour ago, MungerWunger said:

What's the 2025 equivalent of 2021's monkey and rock jpgs

 

I dunno man I can't really think of anything

 

And gif pixels of a monkey smoking cigs... I don't think I can think of anything topping that, possibly ever

 

I mean beanie babies from 1990s were kinda cute and you could have them on your desk and tulips are nice flowers

 

 

[DooDiligence]

Trump trading cards?

Edited October 10, 2025 by DooDiligence

[hardcorevalue]

Just so much less SPAC and IPO issuance makes me think the craziness could continue. Bigger concern for me is US debt and deficit, just seems like both parties are going to run finances into the ground and inflate away the debt so I feel more comfortable in real assets with solid fcf than siting in cash where the CPI numbers are increasingly imputed (lied!) and central bank independence is decreasing to authoritarianism.

Edited October 10, 2025 by hardcorevalue

[TwoCitiesCapital]

15 hours ago, hardcorevalue said:

Just so much less SPAC and IPO issuance makes me think the craziness could continue. Bigger concern for me is US debt and deficit, just seems like both parties are going to run finances into the ground and inflate away the debt so I feel more comfortable in real assets with solid fcf than siting in cash where the CPI numbers are increasingly imputed (lied!) and central bank independence is decreasing to authoritarianism.

 

+1 

 

We're not yet at the point where car companies are rolling vehicles downhill and IPO'ing for billions or someone thinks a stationary bike company is the next Apple. 

 

It has further to go IMO, but that doesn't mean prices now won't prove a good exit in hindsight. Best to phase your way in/out instead of trying to call tops/bottoms. 

[hardcorevalue]

I just don't think I'll go back to huge cash like I've done in other cycles. Yes, I think it's different this time. I'm terrified of inflation and central banks going back to 0 rates to bail everybody out. Own real assets! Buffett has a ton of cash though so what do I know! 

[Eldad]

Gotta love a good red day. Hope it has some legs. 

[Milu]

1 hour ago, hardcorevalue said:

I just don't think I'll go back to huge cash like I've done in other cycles. Yes, I think it's different this time. I'm terrified of inflation and central banks going back to 0 rates to bail everybody out. Own real assets! Buffett has a ton of cash though so what do I know! 

Yes I have wondered a bit recently how Buffett must feel having so much of his assets in rapidly debasing fiat currency. I do wonder if this stash is even keeping up with inflation in real terms after taxes on the interest. I guess he sees it as the least bad option seeing that he’s unlikely to invest in gold, and stock prices are quite stretched.

[brobro777]

48 minutes ago, Eldad said:

Gotta love a good red day. Hope it has some legs. 

 

Oh yea hopefully a few -1000 Dow days are coming, and then we'll be cooking

 

I'm ready baby, more so than in April

 

 

[Libs]

5 hours ago, TwoCitiesCapital said:

 

+1 

 

We're not yet at the point where car companies are rolling vehicles downhill 

 

+1 . Possibly my favorite scam of all time.

 

 

[Red Lion]

20 hours ago, Milu said:

Yes I have wondered a bit recently how Buffett must feel having so much of his assets in rapidly debasing fiat currency. I do wonder if this stash is even keeping up with inflation in real terms after taxes on the interest. I guess he sees it as the least bad option seeing that he’s unlikely to invest in gold, and stock prices are quite stretched.

How much is this is insurance float though? If you’re “investing” your negative cost liabilities in fiat currency there’s still a positive roi right? I think the rapidly debasing fiat currency is leading to higher insurance losses though, which is only a problem if premium growth can’t make up enough to keep the combined ratio below 100.  

[Cigarbutt]

1 hour ago, Red Lion said:

How much is this is insurance float though? If you’re “investing” your negative cost liabilities in fiat currency there’s still a positive roi right? I think the rapidly debasing fiat currency is leading to higher insurance losses though, which is only a problem if premium growth can’t make up enough to keep the combined ratio below 100.  

Your conclusion, to a certain extent, needs to be mitigated by the following aspect (concept of float 'coverage').

Using the Brooklyn Investor methodology, here are the numbers for the last column:

Unadjusted: Q4 2004: 194%   Q2 2025: 186%

Adjusted (in the sense of the @gfp's accrual adjustment that mainstream media tend to overlook (forest or the trees?): Q4 2004: 172%   Q2 2025: 186%

On an objective basis (not Cassandra-like), the maxima reached before happened pre dot-com (b****e) era when The Master was offering humble views about the overall markets in Fortune magazine (1999)..

[changegonnacome]

 

Not sure about the 'everything bubble' but when you see a chart like this you can't help but think about the linkage between historically high equity valuations, historically high margins and how in a circular fashion wealth effects are supporting highly concentrated consumer spending by those who own the appreciated equites.

 

The second point is one i saw recently made by Steve Eisman somewhere - and its if one strips out all the AI capex from the large hyberscalers and deduct it from LTM US GDP growth.....the US ex-AI capex barely grew at all.

 

Combined equity market wealth driving 50% of consumer spending (in no small part because of AI equities driving index returns) and then layer on the reality that US GDP ex-AI capex boom (which in no small part is because these companies are getting rewarded in their equity)....you've got a US a economy unusually levered IMO to the fortunes of SPY & QQQ and not the other way around.

 

[Trophicdynamics]

Valuations are stretched in almost every asset class. Equities, Gold, Bitcoin, private equity, real estate, commodities, to name a few. As the saying goes, the market can stay irrational longer than you can stay liquid so don't short the market. I do think it's prudent to start building a cash reserve.

 

My macro view is that we are going to see recession potentially depression type situation with inflation to boot. I call it deplation or we are getting stagflation at the very least. Consumer and Financial institutions balance sheets are not looking good (huge refiance risk), Shadow banking and private equity is mostly a illiquid market (assets are not being marked down to reflect market reality) Global supply chains are being destroyed (increasing input costs & devastating trade dependent economies), and the money printer is going brrrr (QE is back) while financial repression is happening with interest rates (interest rates below inflation rates). So anyways that's my take

[coffeecaninvestor]

On 10/10/2025 at 3:47 PM, Milu said:

Yes I have wondered a bit recently how Buffett must feel having so much of his assets in rapidly debasing fiat currency. I do wonder if this stash is even keeping up with inflation in real terms after taxes on the interest. I guess he sees it as the least bad option seeing that he’s unlikely to invest in gold, and stock prices are quite stretched.

My guess is he doesn’t care if he loses purchasing power over a 2-3 year period if he thinks he will have an opportunity to buy great businesses at a cheaper prices.. he’s probably more worried about return of capital over return on capital. My guess is he isn’t planning on holding $300+ billion in t-bills forever. Listen to last years AGM he basically walks you through his thought process.