Banks are not raising savings rates to match the Fed, leaving ordinary savers with no safe way to earn returns. This forces investors into stocks to chase yield, inflating demand and prices. The market is behaving unnaturally and unsustainably, which means that when it breaks, the fallout could be severe and widespread. The bull market that began in March 2009 is approaching its peak, with an expected gain of 1000% over 17 years.
Recent parabolic moves since April 2025 signal extreme euphoria, echoing historical bubbles like the Dot-com era.
Investor psychology is overextended, with attitudes like “we can’t lose,” “this time is different,” and the belief that AI will change everything.
Valuation metrics are extreme: the S&P 500 PE is double the 100-year average, and the Buffett Indicator (Market Cap to GDP) is at +215%, far above Dot-com (+138%) and GFC (+105%) peaks.
Buffett’s $350 billion cash position highlights the caution of even the most successful investors.