S&P 500 Gains Appear Sustainable Despite AI Bubble Warning
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History suggests the S&P 500 isn't in bubble territory currently. Over the last 3 years, the index has gained 31%, which is near the long-term average.
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Stock market crashes often happen when 3-year gains reach 100% or more. We're far from that currently.
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There have been 4 instances since 1974 when 3-year S&P 500 price returns topped 100% 1987, 1999, 2012, and 2021. The first 3 led to crashes.
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Apollo's chief economist believes the current AI bubble is bigger than the 1990s tech bubble based on the market cap of the top 10 S&P 500 companies.
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Investor John Hussman believes current valuations likely foreshadow weak 10-12 year returns and deep losses, but DataTrek disagrees.