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First Quadrant Insights:  A Stock Market Bubble Checklist: Are We There Yet?

February 9, 2021

posted by Global Diversified Macro Fund
2mos ago 191

Market pundits have been talking bubbles lately. The broad market appears to be overvalued by many measures. The recent volatility involving GameStop and silver have increased talk of bubbles. But exactly what is a “bubble,” and can we only identify one in hindsight?

In the aftermath of the Dot-Com Bubble, I came up with the following checklist of characteristics common to financial bubbles. You can find a more extended description of each in a more thorough discussion here. Going through these items, it appears that we are heading for an asset price bubble, but we’re not quite there yet, even if the market is overvalued. So, let’s go through the checklist and you can decide whether you agree!


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