Broker Check
Are We In A Bubble?

Are We In A Bubble?

February 23, 2021

Recently, I saw a post on LinkedIn from a guy named Joshua Brown.  We are not related.  He’s a financial advisor in New York City and wrote a book called “The Reformed Broker”.  Anyway, he puts a lot of content out, everywhere.  His post on LinkedIn talked about the many, many times in the past when financial experts and the media were saying the stock market was in a bubble.  Here’s a copy of his post:

November 13, 2020: Legendary investor is certain we're in a bubble (Business Insider)

December 27, 2019: U.S Stock Market is a bubble (Forbes)

April 5, 2018: 'Epic' market bubble is ready to burst (CNBC)

August 9, 2017: Is the stock market a bubble? (USA Today)

June 23, 2016: Uh-oh. Is the stock market in a bubble again? (CNN Money)

September 13, 2015: Fears grow over US Stock Market bubble (Financial Times)

May 6, 2014: Time to worry about stock market bubbles (New York Times)

December 2, 2013: Nobel prize winner warns of US Stock Market bubble (CNBC)

March 27, 2012: Robert Shiller eyes another tech bubble (Yahoo! Finance)

May 3, 2011: Why this Stock Market looks like the tech bubble of 2000 all over again (Business Insider)

January 11, 2021: US stocks surge back towards bubble territory (Business Insider)

All Time Highs


Have you ever noticed when the stock market hits an all time high, it’s a new all time high?  Yet they said the same thing the previous time it was an all time high.  Here are a few interesting milestones for the S&P 500 which is a well known stock market index.

8/4/1963 (Kevin A. Brown was born.  It was Sunday.  I wonder if my mom skipped church.)

8/5/1963 S&P 500 closed at 69.71

1/1/1970:  90.31

1/1/1980:  110.90

1/1/1990:  339.97

1/1/2000:  1,425.59

1/1/2010:  1,123.58

1/1/2020:  3,278.20

2/22/2022:  3901.41

Now, just think of all of the stuff that has happened during that period of time.  Vietnam War, Nixon resignation, oil embargo, moon landings, more wars, tech bubble, Black Monday, Y2K, 9/11, the Great Recession and now the pandemic.  Those are just a few of the things I can think of off the top of my head.  I wonder if these media sources are publishing those articles with scary titles just to sell magazines and get clicks on their websites.  Hmmm…..

Predicting the Future


One of my connections on LinkedIn, Sara Grillo wrote an awesome sentence.  She said, “Your financial future is too precious to put into the hands of someone who doesn’t care.”  She was saying this in regard to taking investment advice from sites like Reddit, Instagram and TikTok but I told her it also applied to mainstream media as well.  I’ve heard it called financial or investment pornography. 

They aren’t concerned about you and your family’s financial freedom.  They’re worried about selling ads.  They get paid by getting eyeballs on their pages.  Today it seems like a lot of the headlines are again talking about stock market bubbles and all time highs.  They have gone from appealing to people’s greed to appealing to their fears.  Neither one is helpful!



March 9th, 2009 was a famous day in the history of the U.S. stock market.  It was the day the S&P 500 hit a new 12 year low from 1997, closing at 676.53.  Since closing at an all time high on October 7th, 2007, the S&P 500 had lost 57% by March the 9th 2009.  Today is 2/23/2021 and the S&P 500 closed yesterday at 3857.07.  If you had invested $100.00 in the S&P 500 index at the beginning of the year in 2009, you would have $558.71 at the beginning of 2021.  That is a 458.17% increase!

On 3/9/2009 I just so happened to be attending a due diligence meeting at American Funds in Los Angeles, CA.  Today, American Funds manages of 2.1 trillion dollars.  They have been managing money since the 1930s.  They have analysts and economists and every other ist you can think of helping them to make informed investment decisions for their clients.  They are one of the best money managers in the world.

During these meetings, they have portfolio manager and investment analysts talk about how they manage money, what they are seeing in the economy and what they think is going to happen in the future.  I remember one woman saying, “Everything that has worked in the past, isn’t working now.”  There was one thing nobody said that day.  Not a single one of them said, today is the day the market will hit a 12 year low and increase over 458% over the next 12 years.  But that’s exactly what happened!

The point of my sharing this with you is, if a money manager with trillions of dollars under management and basically, unlimited resources didn’t know March the 9th was the market low, why should you think a website or a magazine is going to be able to predict the market high? They don’t know what’s going to happen in the future.  Even a broken clock is right twice a day!

Time, Not Timing


You always hear that you can’t time the market, but all of these headlines are trying to time the market.  They’re selling ads by appealing to your fear and greed.  Remember Sara’s sentence, “Your financial future is too precious to put into the hands of someone who doesn’t care.”  Here’s a couple of things you can focus on and help eliminate this noise.

  1. Figure out what you want.  What are your goals?  When do you want to retire?  How much money is it going to take to get you to where you want to go? 
  2. How much do you have to invest to reach your goals?
  3. What rate of return do you need to get to reach your goals? I don’t think you should take on more volatility than is necessary to get what you want.  Remember from October of 2007 through March of 2009, the S&P 500 dropped 57%.  That means if you had $1,000,000 in October, you had a little over $400,000 in March of 2009.  That’s a big drop and a lot of people couldn’t handle it, emotionally.  There are a lot of risk tolerance calculators but I think the question to really think about is, how much could my portfolio go down before I freaked out?  Think about this in dollars not percentages.  For example, you have $500,000.  How much could it drop before you panicked?  $50,000? $100,000? $285,000???


This is the essence of a financial plan.  What you have minus what you want equals what you need.  Then you add in a little risk tolerance, some future value math and possibly a real person who actually cares about you and your dreams and you create financial noise resisting headphones!

As always, if you want to talk to me about your situation, I’m happy to help.  Just click the Get InTouch button at the top of my website and schedule a time.  Have a great rest of the week and thanks for reading!