US stocks are ticking all the boxes of a bubble

There are five key characteristics to every bubble, says analyst Richard Bernstein. This market meets them all

Gamestop stock trader
Democratisation in action
(Image credit: © Shutterstock)

Most analysts agree that the US stockmarket is overvalued on almost any measure you care to use. You can find pockets of value everywhere, and other global markets aren’t quite as expensive (notably the UK). But when it comes to the US, there’s little argument that investors are paying up for stocks in a way that we haven’t seen other than at previous pre-crash highs.

Of course, there are still arguments to be had around how much this matters. You may or may not believe that there are good reasons for the apparent overvaluation. Low interest rates are one pertinent factor, and you can argue that online business models, which are far less capital-intensive than “old economy” companies, make a big difference too. And after years of hearing the same “markets are overvalued” story, you may feel sceptical about how useful valuation is as a measure anyway.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.