Many Happy Returns The Everything Bubble: What Could Possibly Go Wrong?
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Jul 30, 2025 Financial markets are experiencing wild bubbles reminiscent of the dot-com crash, with the S&P 500 and Bitcoin hitting new heights. Meme stocks are making a comeback as retail investors rally around nostalgic favorites like AMC and GameStop, driven by social media buzz. Special Purpose Acquisition Companies (SPACs) represent the latest speculative trend, raising questions about valuation risks. Plus, learn about the mechanics of a gamma squeeze and its impact on stock dynamics, offering a glimpse into the complex world of options trading.
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Valuations Signal Bubble Risks
- Valuation ratios like the CAPE and forward PE show US stock markets are at bubble-like expensive levels.
- However, timing a bubble's burst is almost impossible, so holding stocks long-term is usually recommended.
Speculative Surges in Stocks and Crypto
- Stocks with no profits are surging again, reminiscent of previous market manias.
- Bitcoin's recent rally is partly supported by newly favorable US crypto legislation.
Meme Stocks Driven by Short Squeezes
- Meme stocks often share visibility from nostalgia and heavy short interest, fueling rapid price surges.
- The short squeeze phenomenon creates a feedback loop of buying, which can be risky for investors.
