'I think time is running out': How to survive a market bubble — if there is one
View original at ca.finance.yahoo.com'I think time is running out': How to survive a market bubble — if there is one The concentration of gains in the tech space have sparked disagreement about whether investors are staring down a frothy market or the dawn of a sustainable artificial intelligence era that could drive stocks even higher…
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During the 2007 U.S. housing market bubble, many retirees liquidated their holdings after a third or more of their portfolios vanished overnight. When things rebounded, they bought back in at higher prices
80% confidenceDoes not think the current situation is a bubble
80% confidenceIn 2000, the median age of baby boomers was 45 not 70, so time was on their side to make up for losses. Time is not on their side this time around
80% confidenceIt's apples to oranges comparing current tech valuations to dot-com era
80% confidenceNot quite ready to declare it a bubble — at least not the kind on the verge of spectacular collapse
80% confidenceIt is partially a bubble. There's too much hype and not much delivered in terms of profitability and innovation
80% confidenceThe red zone of AI spend could still be years away. AI bubble concerns are more likely to materialize in the back half of 2026 or early 2027
80% confidenceEarnings even across non-tech sectors have been positive. We are in an economic upcycle, and companies are benefiting
80% confidenceWhen a bubble is bursting or about to burst, either everybody buys everything and pushes the market up, or everybody sells everything and pushes it down. You don't get any discernment
80% confidenceAn equity market correction of the same magnitude as the dot-com bubble could erase US$20 trillion in wealth for U.S. households
80% confidenceNobody took chips off the table this cycle and diversification became a dirty 15-letter word
80% confidenceWe are seeing massive hockey-stick parabolic curves in AI growth
80% confidencePracticing portfolio hygiene, or paying attention to what you own, is important. The last thing you want to do is be sitting in the front seat of the rollercoaster, hanging on for dear life
80% confidenceValuations of major AI-involved companies are still well below the highflyers of the dot-com era
80% confidenceThe net issuance of debt, on a year-to-date basis, has been the highest out of any most recent history that we've seen
80% confidenceIf you're just sitting on cash in an era when there's inflation, then your spending power is being eroded
80% confidenceThere's more debt in the ecosystem now
80% confidenceThe S&P 500 is in a classic price bubble tied to investor behaviour and the reaction to the shift in the technology curve
80% confidenceOften we're making financial decisions based on gut feelings or emotions or even social forces. You can also have people behaving impulsively when markets start moving quickly
80% confidenceToday's Big Tech companies are generating billions in revenue and earnings, not raising money to spend frivolously on a back-of-the-napkin idea
80% confidenceAll these companies cannot attract capital forever if they're not producing anything. A correction will occur at some point
80% confidenceCanadian households' lower exposure to tech and equities means they haven't fully participated in the recent bull market — but it also means they're less vulnerable to a correction
80% confidenceTech companies expected to take on as much as US$1.5 trillion in debt by 2028 to finance AI infrastructure
80% confidenceI think time is running out. We're not in the 10th inning anymore, we're in the 13th or 14th
80% confidenceDiversification should pay off in the longer term after a bubble
80% confidenceEverybody is in the same trade at the same time and the sentiment is as wild as the valuations are
80% confidenceThe Shiller P/E skews things in a way that makes them look more expensive than they actually are
80% confidenceBMO is predicting fixed-income markets will remain steady, especially since most central banks have finished lowering interest rates
80% confidenceThe question is: How big is that bubble today, and how much more potential is there before the risk of it bursting, if at all, emerges?
80% confidenceRight now, the two markets that look the best to me globally are Treasuries and U.K. gilts — because those are two central banks that will still be cutting interest rates — and precious metals
80% confidence