When does extraordinary excess become visible? In hindsight.

Consider the stock market at the start of 2000. Despite ridiculous valuations, scores of profitless IPOs, and an absence of common sense, few seemed to recognize the risks ahead of time. The S&P 500 plummeted 50% and the Nasdaq 100 plunged nearly 80% before investors finally acknowledged the insanity.

How much crazier is the present-day stock bubble? On many measures, today’s valuation extremes make yesterday’s valuation levels look tame.

Indeed, regardless of the metric, the overpriced nature of the 2021 stock bubble is extraordinary.

Yet, the investment community is maintaining its irrational euphoria. And then some. Speculation that stocks will go higher continues to hit record peaks.

In contrast, fewer and fewer folks are willing to speculate that stocks will fall.

Take a look at first-day IPO returns. Examine the popularity of stocks with retail investors. Ponder the explosive growth in blank check SPACs. Then ask yourself, “Am I only going to see this excess in hindsight?”


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