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Is the Stock Market in another Bubble Right Now? · How to Retire on Time

• 0:00
  Mike: Hey, thanks for joining. Here's a question I was recently asked on my show, How to Retire On Time. Take a look. Alright. What do we got from questions?
• 0:13
  David: Okay. How about this one? Mike, are you concerned about the markets right now?
• 0:18
  Mike: Oh. That was probably submitted before I talked about it, buddy. Yeah. Here's no one knows the future of the markets. Yeah.
• 0:28
  I think the markets will be up twenty years from today compared to today. But I look at how expensive the markets are, and that's what concerns me, is when there's a new invention and a lot of excitement, and even the person that bags your groceries at the grocery store is giving you stock tips, there's a lot of euphoria in the market. And when it's surrounded by new invention, whether, and I put this in the email too, but there's the industrial revolution. Yeah. We've got the electrification of America.
• 0:56
  We've got, I mean, these the railroads, all these massive inventions, and the excitement around them typically leads to where the market grows too fast, and then it needs like ten years to digest. My concern is that too many people right now are saying, well, I'm just gonna do the S and P 500 and call it good. It might work. It might not. Because a flat market means the stock market is going, it makes a total return dividends invested at, like, 0% total growth.
• 1:27
  Yeah. Zero. Your money market would have done better. That's Yeah. A And I'm not saying you should go to cash.
• 1:35
  What I'm saying is people don't typically understand the planning that needs to go into place to also hedge for a flat market, which is another leak that many people have. Because if you try to forge through it, a flat market, it's rough on the human soul. Like it's excruciating.
• 1:53
  David: Just seeing your balance kind of go up and down, up and down, but staying mostly over a period of time.
• 1:58
  Mike: For ten years, it doesn't go anywhere.
• 2:00
  David: Flat. Wow.
• 2:02
  Mike: That's a concern, and where it comes from is most financial advisors that I talk to aren't even aware of that being a pattern. So I write about it a lot in Kiplinger. Because I'll say, How are you guys preparing for a flat market? What do you mean? Well, two thousand to twenty ten, was a one time thing.
• 2:21
  That'll never happen again. It's been happening for one hundred and twenty years. Yeah. So, that's the concern. That's my concern.
• 2:29
  David: Yeah. So your main concern about the markets right now is that we could be at some point It might grow
• 2:37
  Mike: for the next twelve months. It might not. We don't know. Yeah. And a flat market will start with a market crash, and then it recovers.
• 2:44
  It gets your hopes up. Oh, we've solved it. We're good to go. Yeah. You got the next ten years of growth, and then you're hit again.
• 2:50
  Right. And in my opinion, and this is this is now speculation. Okay? Complete speculation. I think the AI bubble is the next one, and that will be a one to two year crash.
• 3:05
  It'll be slow. It'll be painful. It'll be excruciating. I don't think it will start this year. I hope maybe it'll starts next year.
• 3:12
  I shouldn't say, I hope it never starts. Right. But if I had to guess, it'll be towards the end of Trump's administration because he will do anything to look good while he's in office. And if things go bad as he's exiting, it's someone else's fault. Right.
• 3:26
  It's what happened last time. It's what will probably happen again this time. And that's not a criticism of Trump. Every president has that same kind of pattern. They want to protect their legacy.
• 3:37
  Trump is a bit more into himself though than most, at least from what he how he talks.
• 3:43
  David: Right.
• 3:45
  Mike: What was that tweet? We need a president with a high IQ to lead the AI revolution. It's like, come on, man. You're not doing yourself any favors. I met Don Jr.
• 3:54
  Uh-huh. And he was even saying like, dad, stop. Just stop with the phone. So, and then whoever ends up with the next presidency, it's kind of like Obama inherited the great financial crisis. Oh, yeah.
• 4:07
  So, I think we're gonna have the AI bubble pop soon. Don't know when. It's gonna go down. I think the next innovation is going to be using cryptocurrency in the debt market, slowly attacking the bond market, and it will feel good, and it will create so much new capital, new investment opportunities. And then when they go to mark to market accounting on debt, just like they did this for the housing crisis, that's when the next financial crisis will be is because of cryptocurrency being misused.
• 4:38
  I have nothing against crypto. Yeah. But I have a lot of of grief as it's being used more and more for collateral for debt obligations.
• 4:50
  David: Yes.
• 4:52
  Mike: So and I've been I've said this before, and I'll say it again. When Wall Street creates a new invention that allows them to repackage the same system in a different way and lets them kind of cheat the system a little bit because innovators will always outrun regulators. Kind of what happened with the CDOs, the collateralized debt obligations. It was Lewis. No.
• 5:20
  Lewis Rennieri's mortgage Yeah. Backed security in the eighties that was gangbusters. Bonds became the coolest thing to sell. Bond funds. And then they ran out of mortgages to put in there, so they started repackaging it in different ways.
• 5:35
  Well, bond market's great right now. How do they make it great again?
• 5:39
  David: Mhmm.
• 5:40
  Mike: Or even better, they might need to add in some other things in there. And as they add in other things, it decay So, that's a huge concern of mine.
• 5:48
  David: Okay. And so having said all that though, we shouldn't I feel like a little bit of fear in my belly like, oh. So but you would probably say, you don't need to fear.
• 5:58
  Mike: Your portfolio look at your portfolio this week. Yeah. If it concerned you, you've got the wrong portfolio.
• 6:02
  David: Oh, okay.
• 6:04
  Mike: You the idea is if if you're reacting to what your portfolio does and to everything I just said, you've got the wrong portfolio, and you probably don't have a plan. Mhmm. Because when you can control what you can control, and you have a prepared reaction, not a risky prediction, and you're following systems, not sentiment. Mhmm. This stuff shouldn't bother you.
• 6:24
  So for all those who are tuning right now going, hey, this is this is great. What's the next step? I'd say come to our workshop. It's this Tuesday night at 06:30 central time. We're hosting it on Zoom, so you can attend from the comfort of your home.
• 6:38
  Just go to retireontime.com/workshop to RSVP. That's retireontime.com/workshop. We'll see you there. That's all the time we've got for today's show. If you enjoyed the show, thanks for tuning the podcast.
• 6:50
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