Are we in a bubble?

[Paarslaars]

[Blake Hampton]

38 minutes ago, Castanza said:

 

"Many shall be restored that now are fallen and many shall fall that now are in honor."
Horace—Ars Poetica.

[cubsfan]

On 5/15/2026 at 1:41 PM, Blake Hampton said:

Looking for wisdom from Trumpers.

 

Here is my wisdom from the biggest Trumper...

 

Listen to these other guys - believe me - they know their shit. If you don't like the whole DCA method, this forum comes up with amazing ideas. Be selective.... but be open minded.

 

Fairfax at 1600 - yup, Castanza says...

[Castanza]

10 minutes ago, Blake Hampton said:

"Many shall be restored that now are fallen and many shall fall that now are in honor."
Horace—Ars Poetica.

 

Value investing in a nutshell...

[Blake Hampton]

29 minutes ago, cubsfan said:

Here is my wisdom from the biggest Trumper...

 

Listen to these other guys - believe me - they know their shit. If you don't like the whole DCA method, this forum comes up with amazing ideas. Be selective.... but be open minded.

 

Fairfax at 1600 - yup, Castanza says...

Goddamn it Cubs, you're right. There are a lot of brilliant people on this board. I'm 100% certain that even the ones I often feud with are quite intelligent in a lot of areas, many of them, I'm sure, where I'm not. I thank you guys for being able to push back on me in ways that very few in my personal life can.

And I should probably learn to listen more, and you can probably never be a good enough listener.

 

But the fiscal stuff scares the bejeezus out of me, and I don't think I'm gonna budge on it. I believe the future is shaping up to be starkly different than the past. This has always been true, of course, but sometimes in history, it can be radically so. On the cusp of this radical change is where I think we stand today.

Those are just my thoughts.

Edited May 18 by Blake Hampton

[73 Reds]

32 minutes ago, Blake Hampton said:

Goddamn it Cubs, you're right. There are a lot of brilliant people on this board. I'm 100% certain that even the ones I often feud with are quite intelligent in a lot of areas, many of them, I'm sure, where I'm not. I thank you guys for being able to push back on me in ways that very few in my personal life can.

And I should probably learn to listen more, and you can probably never be a good enough listener.

 

But the fiscal stuff scares the bejeezus out of me, and I don't think I'm gonna budge on it. I believe the future is shaping up to be starkly different than the past. This has always been true, of course, but sometimes in history, it can be radically so. On the cusp of this radical change is where I think we stand today.

Those are just my thoughts.

Blake, from one stubborn SOB to another:  Being scared doesn't cut it.  You still gotta find something that works for you.  I'm not much into stocks either and spend almost no time in the weeds with equities research.  I enjoy the process of RE a whole lot more.   But waiting for something to happen that may never come is no plan; even if it does, do you have a plan?  The magic of compounding only works if you let it.

Edited May 18 by 73 Reds
word

[cubsfan]

27 minutes ago, Blake Hampton said:

Goddamn it Cubs, you're right. There are a lot of brilliant people on this board. I'm 100% certain that even the ones I often feud with are quite intelligent in a lot of areas, many of them, I'm sure, where I'm not. I thank you guys for being able to push back on me in ways that very few in my personal life can.

And I should probably learn to listen more, and you can probably never be a good enough listener.

 

But the fiscal stuff scares the bejeezus out of me, and I don't think I'm gonna budge on it. I believe the future is shaping up to be starkly different than the past. This has always been true, of course, but sometimes in history, it can be radically so. On the cusp of this radical change is where I think we stand today.

Those are just my thoughts.

 

That's fine Blake. I know I would like to see you make lots of money here - so yeah - there will be some teasing, etc - but the boys want you to succeed mightily.  

[DegenerateGambler]

Costco is selling at 56 times earnings, just FYI, so it's kind of hard not to call this a bubble.  But it could go on for a long time.

[Parsad]

8 hours ago, Mephistopheles said:

Perhaps I stand corrected, but just referring to say the largest 5-10 cos like MSFT, INTC, ORCL, etc vs the largest ones today. The capex was same (relative to fcf)? Didn’t realize CSCO’s capex was that high but it does make sense. I should’ve looked it up. 

 

Yes, I agree with you in terms of the software companies...capex was no different than today.  Although, MSFT was priced at I believe 140 P/E in January/February of 2000.  MSFT today is priced at about 25 P/E.   The Mag7 are all priced between 20-45 times P/E other than TSLA...which is at a crazy-ass 375. 

 

This bubble probably has some room to run before it pops, and I don't think it will be as dramatic as 2000-2003...albeit it could be as painful based on the lending/borrowing/investment practices and the sheer size of that capital being deployed.  Cheers!

[Parsad]

4 hours ago, Gregmal said:

Must be MAGAmath 

 

MAGAmath would be:

 

2+2=Biden

 

4x4=Obama

 

Drug prices are down 600%

 

1 in 10,000 = Vaccines bad for everyone, 1 in 10,000 = Ivermectin good for everyone.  This is also known as a "conundrum"!

 

$30B < X < $1T = where X equals Obliteration of Iran and a wide open SOH for everyone

 

Zero = naught = Trump tariffs

 

A PhD in MAGAMath can be earned only at Trump Universities...now online in CHY-na!  Cheers!

 

 

 

[Gregmal]

39 minutes ago, DegenerateGambler said:

Costco is selling at 56 times earnings, just FYI, so it's kind of hard not to call this a bubble.  But it could go on for a long time.

Yea but people have been whining about Costco being expensive for a decade, if not longer.

[DegenerateGambler]

17 minutes ago, Parsad said:

 

Yes, I agree with you in terms of the software companies...capex was no different than today.  Although, MSFT was priced at I believe 140 P/E in January/February of 2000.  MSFT today is priced at about 25 P/E.   The Mag7 are all priced between 20-45 times P/E other than TSLA...which is at a crazy-ass 375. 

 

This bubble probably has some room to run before it pops, and I don't think it will be as dramatic as 2000-2003...albeit it could be as painful based on the lending/borrowing/investment practices and the sheer size of that capital being deployed.  Cheers!

Yeah I feel the same, there will be some correction in some sectors but hard to fathom it falls 78% like the Nasdaq did during the dot com crash.  Meanwhile Costco is at 56 times earnings, higher than the Mags...

But people are also auto-buying the market indices ETFs in their 401k monthly program, so I can't really see a "crash" of some sort.  

Margin Debt as a percent of M2 (total money supply) is now at 93.5% of dot com peak, but i don't think margin unwinding will have nearly the same effect as the dot com crash.

On one hand, it won't hurt as much as these margin or overcrowded trades unwind, but on the other hand one cannot make generational wealth on the way up and on the way down then on the way up again picking up quality companies for peanuts on the dollar neither.  So for the average, there will be some pain as some sectors correct, but for the astute, this time it won't offer nearly the same opportunities ala Fairfax 2009 or dot com crash.

[Parsad]

1 hour ago, Blake Hampton said:

Goddamn it Cubs, you're right. There are a lot of brilliant people on this board. I'm 100% certain that even the ones I often feud with are quite intelligent in a lot of areas, many of them, I'm sure, where I'm not. I thank you guys for being able to push back on me in ways that very few in my personal life can.

And I should probably learn to listen more, and you can probably never be a good enough listener.

 

But the fiscal stuff scares the bejeezus out of me, and I don't think I'm gonna budge on it. I believe the future is shaping up to be starkly different than the past. This has always been true, of course, but sometimes in history, it can be radically so. On the cusp of this radical change is where I think we stand today.

Those are just my thoughts.

 

So fiscal stuff scares you more than nuclear obliteration.  It's almost guaranteed that some sort of NCB weapon will be deployed in a major city during your lifetime.  Do you have a bomb shelter with at least 5 years of supplies, air, lighting/energy, weapons, etc.  If not, why the heck are you so deathly afraid of volatility in the markets?

 

Unless you have a lot of debt or leverage, feel like markets will never recover, I don't understand why you wouldn't even put a portion of your capital to work to hedge if you are wrong in your beliefs?

 

Cheers!

[Longnose]

44 minutes ago, Parsad said:

It's almost guaranteed that some sort of NCB weapon will be deployed in a major city during your lifetime.

 

Oof...

[Spekulatius]

19 hours ago, Parsad said:

 

No, there was as much capex last time, if not more relative to cash flow...Nortel, 360 Networks/LVLT, Cisco, Amazon, etc. 

 

The other aspect was that simple access to the internet did not create efficiencies that fell directly to operating margins.  AI is doing that...which is very different than the Industrial revolution, Digital revolution or Internet revolution.  Because of the additional value from general artificial intelligence, it is having a direct influence on operating margins and creating real earnings that weren't present in other economic revolutions. 

 

Not saying AI isn't in a bubble...just that the size and scope is markedly different than past bubbles in terms of ACTUAL business improvements and efficiencies.  Cheers! 

Incorrect. Fiber optic Capex was ~$120B in 2000 (the peak year) which is ~$215B in today’s numbers. AI Capex is ~$700B and supposed to go to $1T. So the current Capexspent is multiples of what we had in 1999-2001.

[Parsad]

31 minutes ago, Spekulatius said:

Incorrect. Fiber optic Capex was ~$120B in 2000 (the peak year) which is ~$215B in today’s numbers. AI Capex is ~$700B and supposed to go to $1T. So the current Capexspent is multiples of what we had in 1999-2001.

 

That's not an apples to apples comparison. 

 

US stock market capitalization in 2000 was about $15T.  US stock market capitalization today is $69T.  Or nearly 5 times.

 

S&P500 P/E in 2000 was about 32.  S&P500 P/E today is roughly the same.

 

So capex spend relative to earnings and market cap isn't far off and relatively the same.  

 

Dow 30 P/E in 2000 was roughly 30.  Dow 30 P/E today is about 24.  

 

So the very large cap stocks today are not priced nearly as high as the very large cap stocks of the internet era.  They may still get there!

 

Cheers!

[Mephistopheles]

6 hours ago, Parsad said:

 

Yes, I agree with you in terms of the software companies...capex was no different than today.  Although, MSFT was priced at I believe 140 P/E in January/February of 2000.  MSFT today is priced at about 25 P/E.   The Mag7 are all priced between 20-45 times P/E other than TSLA...which is at a crazy-ass 375. 

 

This bubble probably has some room to run before it pops, and I don't think it will be as dramatic as 2000-2003...albeit it could be as painful based on the lending/borrowing/investment practices and the sheer size of that capital being deployed.  Cheers!

 

Yea that's what I was getting at. I asked AI what the largest tech/telecom companies by market cap 1999 vs. MAG7 in 2025 FCF yield and capex as a % of market cap:

 

1999 Dot-Com Tech Leaders	1999 FCF Yield (% of Market Cap)		2025 Magnificent Seven	2025 FCF Yield (% of Market Cap)
Intel (INTC)	2.81%		Apple (AAPL)	2.43%
IBM (IBM)	2.19%		Meta Platforms (META)	2.21%
Microsoft (MSFT)	1.54%		Microsoft (MSFT)	1.78%
Cisco Systems (CSCO)	0.47%		NVIDIA (NVDA)	1.21%
America Online (AOL)	0.22%		Alphabet (GOOGL)	1.00%
Nokia (NOK)	0.17%		Amazon (AMZN)	0.94%
Lucent Technologies (LU)	-0.74%		Tesla (TSLA)	0.34%

 

1999 Dot-Com Tech Leaders [1, 2]	1999 CapEx Yield (% of Market Cap)		2025 Magnificent Seven	2025 CapEx Yield (% of Market Cap)
Lucent Technologies (LU)	0.71%		Amazon (AMZN)	4.89%
Nokia (NOK)	0.70%		Alphabet (GOOGL)	2.42%
Intel (INTC)	1.24%		Microsoft (MSFT)	2.21%
IBM (IBM)	3.21%		Meta Platforms (META)	3.60%
America Online (AOL)	0.12%		Tesla (TSLA)	0.51%
Cisco Systems (CSCO)	0.11%		Apple (AAPL)	0.31%
Microsoft (MSFT)	0.09%		NVIDIA (NVDA)	0.07%

 

Metric (Group Average)	1999 Dot-Com Tech Leaders	2025 Magnificent Seven
Average FCF Yield	0.95%	1.42%
Average CapEx as % of Market Cap	0.88%	2.00%

 

• 1999 Dot-Com Tech Leaders: ~17.8% of the S&P 500
  (Combined group market cap of ~$2.22 trillion against a total S&P 500 index market cap of ~$12.5 trillion)
• 2025 Magnificent Seven: ~34.3% of the S&P 500
  (Combined group market cap of ~$20.97 trillion against a total S&P 500 index market cap of $61.1 trillion) [1, 2, 3, 4]

 

So neither group has great numbers, but the latter group is twice the size as a % of the market. So if the pattern follows, the "market" should have a big downturn. Of course so many stocks hitting 52 lows, so by no means am I saying there's nothing to buy. 

[DegenerateGambler]

17 minutes ago, Mephistopheles said:

 

Yea that's what I was getting at. I asked AI what the largest tech/telecom companies by market cap 1999 vs. MAG7 in 2025 FCF yield and capex as a % of market cap:

 

1999 Dot-Com Tech Leaders	1999 FCF Yield (% of Market Cap)		2025 Magnificent Seven	2025 FCF Yield (% of Market Cap)
Intel (INTC)	2.81%		Apple (AAPL)	2.43%
IBM (IBM)	2.19%		Meta Platforms (META)	2.21%
Microsoft (MSFT)	1.54%		Microsoft (MSFT)	1.78%
Cisco Systems (CSCO)	0.47%		NVIDIA (NVDA)	1.21%
America Online (AOL)	0.22%		Alphabet (GOOGL)	1.00%
Nokia (NOK)	0.17%		Amazon (AMZN)	0.94%
Lucent Technologies (LU)	-0.74%		Tesla (TSLA)	0.34%

 

1999 Dot-Com Tech Leaders [1, 2]	1999 CapEx Yield (% of Market Cap)		2025 Magnificent Seven	2025 CapEx Yield (% of Market Cap)
Lucent Technologies (LU)	0.71%		Amazon (AMZN)	4.89%
Nokia (NOK)	0.70%		Alphabet (GOOGL)	2.42%
Intel (INTC)	1.24%		Microsoft (MSFT)	2.21%
IBM (IBM)	3.21%		Meta Platforms (META)	3.60%
America Online (AOL)	0.12%		Tesla (TSLA)	0.51%
Cisco Systems (CSCO)	0.11%		Apple (AAPL)	0.31%
Microsoft (MSFT)	0.09%		NVIDIA (NVDA)	0.07%

 

Metric (Group Average)	1999 Dot-Com Tech Leaders	2025 Magnificent Seven
Average FCF Yield	0.95%	1.42%
Average CapEx as % of Market Cap	0.88%	2.00%

 

• 1999 Dot-Com Tech Leaders: ~17.8% of the S&P 500
  (Combined group market cap of ~$2.22 trillion against a total S&P 500 index market cap of ~$12.5 trillion)
• 2025 Magnificent Seven: ~34.3% of the S&P 500
  (Combined group market cap of ~$20.97 trillion against a total S&P 500 index market cap of $61.1 trillion) [1, 2, 3, 4]

 

So neither group has great numbers, but the latter group is twice the size as a % of the market. So if the pattern follows, the "market" should have a big downturn. Of course so many stocks hitting 52 lows, so by no means am I saying there's nothing to buy. 

By 2 measures, we are 94% of the way there to the dot com bubble but I feel this one could still get bigger 20-30% if not more due to the AI buildout.

First is total market cap / total money supply is now at 94% of the dot com bubble peak

Second is total margin debt / total money supply is now at 93.5% of the dot com bubble peak.

 

Right now we have been seeing rotation from AI into beaten up software, who knows if this trend will continue or not.

[Spekulatius]

8 hours ago, Parsad said:

 

That's not an apples to apples comparison. 

 

US stock market capitalization in 2000 was about $15T.  US stock market capitalization today is $69T.  Or nearly 5 times.

 

S&P500 P/E in 2000 was about 32.  S&P500 P/E today is roughly the same.

 

So capex spend relative to earnings and market cap isn't far off and relatively the same.  

 

Dow 30 P/E in 2000 was roughly 30.  Dow 30 P/E today is about 24.  

 

So the very large cap stocks today are not priced nearly as high as the very large cap stocks of the internet era.  They may still get there!

 

Cheers!

The fact that stock market capitalization is so much higher than in 1999 relative to the size of the economy is just further evidence of a bubble. That why I used approximate 2025 dollars. Also, when you look at fiber optics Capex spent as a percentage of GDP, it was about 1.5% back then and now we are pushing 4%.

 

By most objective measures, this AI boom is ~3x the size of the Y2000 telecom boom, normalized for growth the economy since then.

[coffeecaninvestor]

15 hours ago, DegenerateGambler said:

Costco is selling at 56 times earnings, just FYI, so it's kind of hard not to call this a bubble.  But it could go on for a long time.

 

Just don't fish in the Costco pond.

 

Annualized Returns 2000-2002:

S&P 500:  -14.6% (29x PE in year 2000)

Lg Cap Value: -9.56%

Mid-Cap Value: 1.12%

Sm-Cap Value: 5.94%

 

Spending some time in value land you could have done much better than the index's. This seem to be rhyming a little (PE ratios are rounded).

 

Annualized Returns 2000-2002:

BRK.B: 9.81% (Year 2000 PE: 15x / Current TTM PE: 15x)  

BRO: 51.24% (Year 2000 PE: 18x / Current TTM PE: 18x)  

JNJ: 6.26% (Year 2000 PE: 26x / Current TTM PE: 26x)  

GIS: 12.45% (Year 2000: 8x / Current TTM PE: 8x)  

DEO: 15.17% (Year 2000 PE: 18x / Current TTM PE: 18x)  

AOS: 10.18% (Year 2000 PE: 15x / Current TTM PE: 15x)  

 

[Castanza]

1 hour ago, Spekulatius said:

The fact that stock market capitalization is so much higher than in 1999 relative to the size of the economy is just further evidence of a bubble. That why I used approximate 2025 dollars. Also, when you look at fiber optics Capex spent as a percentage of GDP, it was about 1.5% back then and now we are pushing 4%.

 

By most objective measures, this AI boom is ~3x the size of the Y2000 telecom boom, normalized for growth the economy since then.

 

You can't look at capex in a vacuum without looking at earnings and margins of the top companies "growing the bubble." 

 

in 1999 the top 9 out of 10 companies (Nasdaq 100) had a PE over 100...today the average is like 26x with a high of 40 I believe. Margins are also wildly different (much larger today for a larger percentage of the market). I'm not arguing their isn't a bubble of course. Capex spend will likely overrun and we will over supply. But that's also pretty standard bananas operating procedure for these types of things. Cloud was the same way in ~2016ish but a smaller scale for sure.  

[Paarslaars]

That in my opinion is the difference between a bubble and a boom.

 

[Gregmal]

I owned Costco for the better part of a decade. The same bullshit arguments about PE were always made. It 5x’d, maybe a little more, over that timeframe. In 2022 I sold it because I bought into the higher rates equals lower valuation argument many were making. Since then it’s gone from 550 to ~1100. 

[coffeecaninvestor]

35 minutes ago, Gregmal said:

I owned Costco for the better part of a decade. The same bullshit arguments about PE were always made. It 5x’d, maybe a little more, over that timeframe. In 2022 I sold it because I bought into the higher rates equals lower valuation argument many were making. Since then it’s gone from 550 to ~1100. 

 

There are a handful of companies that are like this ROL comes to mind. But I don't believe multiple compression is a made up thing.. Look at some of the software stocks. COST and ROL are continuing to execute better than any of their competitors.

 

 

 

 

 

 

[Pellom]

A take I'm workshopping (but not sure if I believe totally) is that the 24/7 social media news cycle makes the formulation of a "bubble" much harder. Of course, because it does seem like we know everything there is to know, I suppose there is an argument that an existential out-of-left-field shock would do far more damage. 

 

Also, if we are in a "bubble," market makers cannot allow it to pop without being able to monetize their SpaceX, Anthropic, OpenAi, etc., shares. The music must play until they can unload those shares on the public.