There has to be a catalyst to “burst” a bubble

Posted on: February 21, 2020 at 18:36:15 CT

But before that, there has to be a “bubble” to begin with....

Is there a bubble today? Where, asset prices? Maybe a little overpriced, but there are earnings to support that.

2000 dot com bubble was created by inflated prices with no earning. Zero profits. Today’s technology sector is driven by enormous profits and growth.

2008 the bubble was created in the housing market with ridiculous lending standards and a consumer that was overstretched with debt.

Today’s consumer has lower debt payments per disposable income than ever. Sitting in more cash than ever too. Job market is strong and could get stronger with more labor participation.

The stock market may be overvalued but I don’t see a bubble. I also don’t see a catalyst to “pop” a bubble that doesn’t exist.

We have a friendly Fed. A government that is going to spend (whether it’s R or D). And a consumer that is employed and saving their money, while spending some too.

Coronavirus or something geopolitical could potentially derail the markets - that’s always a risk - but that would bode well for the incumbent. Keep the current leadership intact so they can deal.