Markets Whale

Tech hype bubbles typically burst well before retail investors start screaming overvaluation, and right now, stocks aren’t dropping. Looking back at the dot-com bubble, one of the clearest signs was gold hitting decades-lows—money was so eager to chase internet stocks that traditional safe-havens lost appeal. Today, gold is at all-time highs and still climbing fast.

So how do we reconcile a market that climbs daily, fueled by a handful of dominant industries, with some stocks sporting mind-boggling valuations while everyone warns of a bubble? The answer lies in investor psychology amid a complex macro landscape.

The wealthy currently fear holding cash more than a potential crash. USD devaluation—driven by policy decisions and global macro trends—combined with persistent inflation (keeping the Fed’s hands tied due to massive national debt), means the value of USD is effectively collapsing from two sides. On one hand, inflation erodes purchasing power; on the other, devaluation helps reduce real debt loads. The net effect: cash has become a poison asset.

With major capital holders reluctant to hold cash or stagnant equities, the natural alternatives are real assets like gold or Bitcoin—scarce stores of value—and equities with perceived growth potential, most notably AI-focused companies. If you strip out AI, the S&P 500’s growth is lackluster at best. Non-growing stocks struggle when currency value erodes, so investors stick where growth and scarcity meet.

Why only U.S. equities? Because global economic players such as China, Europe, Japan, and Russia face slow or negative growth, investors are effectively funneled into American markets. U.S. equities represent the safest bet when alternatives look worse; trust remains strongest in American capitalism and tech leadership despite broader uncertainties.

This means today’s bull market, especially the AI-driven segment, is underpinned by multiple forces—not just hype or OpenAI’s dominance. Call it a triple bull market: sustained growth potential, scarcity of alternatives, and forced preference for U.S. stocks.

Will this continue indefinitely? No one knows. But as long as U.S. companies hold global superiority, cash remains risky, AI innovations kindle hopes, and global economies wobble, a major crash seems unlikely. If these dynamics shift, it will be time to watch closely.

Disclaimer: This information is for educational and informational purposes only. It does not constitute financial advice, nor does it constitute a solicitation to buy or sell any securities. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions.