Is the Stock Market experiencing a Bubble phase?

There is currently lots of speculation going on, saying that the stock market is experiencing a bubble. This has been noticed everywhere on Google and YouTube. Does this look like we’re setting up for another Dotcom crash? NASDAQ recently went up 12,000, being a record. To some people, this looks like the stock market going up every day is a guarantee for it to fall. Hi, I welcome you all to my blog. If you enjoy this blog, please encourage me by liking, commenting, and sharing this post. Subscribing to this channel will also mean a lot. If you wish to know more about the stock investment game, watch my video ‘The beginners guide to stock investment 2020‘.

A quick check on NASDAQ about six months ago shows that it almost doubled with 6,000, having a 52 weeks high of 12,000. When things like this are noticed, it poses a lot of questions in investors’ minds, curiously finding out if we’re in the bubble era. So today, I will be discussing the question: is the stock market experiencing a bubble phase? Please remember that everything I say here is my opinion and not law, so don’t be tied to it. Also, all figures noted here are accurate for the 3rd day of September.

S&P 600 SmallCap

I will begin by looking at the S&P 600’s recent history; it has never experienced growth this year. Yes, the stock is high, but it does not indicate that we’re already in a bubble even if it goes higher than this. When you talk about the bubble scenario, it shows there is a massive high in stock value. This rise in the value will be much more than the recent high we are experiencing. From my conclusion, we are not in a bubble yet.

S&P 400 MidCap

There’s also a high in the S&P 400 MidCap, though it is not too high. Yet this is not a qualification for saying that we’re in a bubble. When you take a look at the S&P 500, it seems to be scary as the forward PE ratio for the S&P 500 appears to be a Largecap. This shows it is massively higher than anything, not even in history. In my opinion, this can qualify for being in a bubble phase. If you go-ahead to the S&P 500 large-cap, it’s a territory of bubbles. With the incredibly high value for the LargeCap, there is a lot of worry for the coming year.

From the forward PE Russell 2000, its growth category was purely in a bubble. They had their growth at 60. There has been no time this growth stock was trading at anywhere close to these forward PE. This shows that anything in this growth category in growth stocks is overvalued. It’s not just only overvalued in the context of looking at recent growth but anytime in the past, say, 16, 17 years.

PE & PEG S&P 500

Taking a look back to 2001 territory from the chat, there’s no way you would look at this chart and not be scared. This may leave you guessing about what’s going on in the stock market. Regardless, there are lots of things that have been observed about this bubble in the chart.

In my opinion, several positions are interesting about this that makes the market scary.

The following are the concluded facts:

This time seems the perfect time for stock pickers to shine. This isn’t the time to conserve money and be finding out which stock would make money. When you go to some top period, you will find some stock that would do better than the market doesn’t, in general. Some stock would outperform others if they go down less or go up when the market is down. 5 or 6 months ago, it was obvious you could buy or sell anything with a look from the NASDAQ chart with a PE of 2200. It doesn’t matter which stock you wanted to buy then.

In my final opinion, I think it’s going to be critical to know what to do in the next half a year to 18 months in the stock market. If you’re not ready to know what you want in these stocks, you may not make much money in the market.


The bubble era for the stock market could be an interesting period throughout its lasting period. However, nobody knows when the bubble era sets in as a specific stock might be in a bubble today but crashes the following day. So do not be worried as a long term investor and just concentrate on the future of the company you are investing in. If you were entertained by this post, do not forget to like, comment, and share with others. Also, do not forget to subscribe if you are a newbie.



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