A Primer on Bubbles
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 26 March 2021
⏱️ 18 minutes
🔗️ Recording | Apple Podcasts | RSS
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Summary
Who would have guessed that at the one-year mark of the worst market drop since the Great Financial Crisis, one of the hottest topics in financial markets is whether or not we are in a “bubble.” Am I the only one that sees a tiny bit of irony here? A year ago, the conversation was entirely focused on whether or not millions of American people were going to die, how long the entire American economy would be shut down for (hint: it lasted longer than 15 days to bend the curve), and whether 18,000 in the Dow would prove to be low enough.
Painful times, painful memories.
Today I want to look into the very idea of bubbles, evaluate as intelligently and objectively as I am able what is going on in markets right now and what is not going on, and see if we can’t offer a little clarity into a subject that I think gets quite polluted by poor punditry. Of course, if it weren’t for poor punditry, wealth advisors like us would have a lot less cleaning up to do.
Join us in the Dividend Cafe …
Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:12.5 | Hello and welcome to this week's Dividend Cafe. I am recording here at my house in Newport Beach, kind of bunch of things going on this weekend, |
| 0:24.0 | but I'm really actually excited about this week's Dividend Cafe. |
| 0:30.0 | The message from it, the content from it is something that I think a lot of people are asking about. |
| 0:36.1 | I'm looking forward to talking to you about that here now on the podcast and the video. |
| 0:42.5 | And then as always, I would love for you to go to dividend cafe.com where there's, you know, |
| 0:47.2 | a little bit more elaborate written commentary. |
| 0:50.7 | But the subject is this whole concept of a bubble and excess and, you know, |
| 0:58.6 | the risk of things being in this really frothy period of time. And I want to first start |
| 1:05.7 | with an observation. I think is fascinating. I'm sitting here recording going into the last |
| 1:14.5 | weekend of March of 2021. And one year ago, in the last weekend of March 2020, all of the |
| 1:25.2 | questions, all of the punditry, all of the commentary, all of the conversation was totally understandably around how low are we going to go, how bad is it going to get, how many millions of people are going to die, hospitals overrun, the length and severity of a lockdown, |
| 1:49.5 | questions about what the economic contraction would look like, are people ever going to fly again, |
| 1:54.8 | our business is ever going to, you know, open again. There was this peak level of where we were |
| 2:00.0 | a year ago of uncertainty. |
| 2:02.4 | And as markets in this week that we just got done memorializing hit their bottom through |
| 2:10.4 | that period, there was an exorbitant amount of discussion as to retesting the lows, |
| 2:21.2 | breaking through to new lows, lower than even that 18,300-ish figure that we had hit on March 23rd. |
| 2:28.0 | And so all of those things at the time, contextually, there were a lot of people that were |
| 2:32.0 | wrong, those that predicted we were going to go |
| 2:34.2 | all the way to 15,000 and 10,000 or whatever didn't happen. And there's a whole lot of reasons. |
| 2:41.7 | And I don't have any problem with that. That's the way the world works, that when the facts change, |
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