WSJ's Take On the Week

Is the Stock Market in a Speculative Bubble? T. Rowe Price CIO Weighs In

4 snips
Aug 3, 2025
Sébastien Page, head of global multi-asset at T. Rowe Price and author of 'The Psychology of Leadership,' joins the hosts to discuss the current state of the stock market. He analyzes the surge in margin debt exceeding $1 trillion as a sign of investor exuberance. Page highlights why AI stocks may have a promising future and shares insights on sports psychology to improve investment strategies. He promotes the importance of a disciplined approach to navigating market uncertainties, including the need for diversification in today’s economy.
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INSIGHT

Market Concentration vs Fundamentals

  • Despite market concentration, strong fundamentals like high margins and profits support valuations.
  • However, high-risk, low-quality stocks showing significant outperformance signals some bubble-like behavior.
INSIGHT

Equity Risk Premium Insight

  • The equity risk premium is nearly equal to bond yields, which is unusual and a potential bubble signal.
  • AI-driven productivity gains support the case that stocks will still provide a risk premium over bonds.
ADVICE

Separate Luck from Skill

  • Separate luck from skill when evaluating investment outcomes to avoid false confidence.
  • Focus on process and decision quality rather than short-term results.
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