Markets Are In A "Speculative Blowoff", But When Will It End?

By Adam Taggart of Thoughtful Money

President & Co-Founder at Peak Prosperity • Feb 27, 2024 at 4:51 PM EST

Are we in a new era of irrational exuberance, this time driven by the promise of artificial intelligence? And if so, what's the danger this time of another prolonged contraction ensuing?

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Back in 1996, Federal Reserve Chair Alan Greenspan famously said:

"How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions?"

It was a prophetic question, as the stock market soon after became caught up in the mania of the DotCom bubble, reaching unprecedented levels of overvaluation followed by a precipitous price correction. The Nasdaq didn't return to its 2000 highs until 15 years later.

Many are feeling like it's deja vu all over again with the latest run-up in the small number of stocks, colloquially known as the Magnificent 7, driving the market indices to new record highs.

Are we in a new era of irrational exuberance, this time driven by the promise of artificial intelligence?

And if so, what's the danger this time of another prolonged contraction ensuing?

Video Length: 01:12:33

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Disclosure:

Thoughtful Money LLC is in the application process to be a Registered Investment Advisor Solicitor. We produce educational content geared for the individual investor. It’s important to note that this content is NOT investment advice, individual or otherwise, nor should be construed as such. We recommend that most investors, especially if inexperienced, should consider benefiting from the direction and guidance of a qualified financial advisor in good standing with the Financial Industry Regulatory Authority (FINRA) who can develop & implement a personalized financial plan based on a customer’s unique goals, needs & risk tolerance. IMPORTANT NOTE: There are risks associated with investing in securities. Investing in stocks, bonds, exchange traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible. Some high risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods. A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.

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