Hope everyone is having a great summer thus far, but don’t blink b/c it’ll be gone quickly! My family has a beach trip in July, and then I have a golf trip in August, and then it’ll be football season again. Oh, well…time flies when you’re having fun.
I don’t have a ton to cover today, but I do want to touch on a few things happening in the markets. I’ve been pretty adamant that we weren’t in an AI/Tech bubble and have encouraged investors to ignore much of the noise. Of course, I’m also on record for being cautious about 2026 market returns. So far, one of those calls has been correct and I’m happy to say that I’ve been too cautious so far this year. I’ve also suggested that it is never wise to bet against the US consumer and the incredible companies that make up our markets.
But, let’s look at 2026 thus far. Of course, we’ve had several really good years recently in the markets. Statistically, we are just due for a down year, but the markets don’t care about statistics. That’s why we don’t manage portfolios based on prognostications (mine or someone else’s). Yet in 2026, we’ve seen plenty of reasons for investors to worry: accelerating inflation (at least for now), war in Iran, the continuing conflict in Ukraine, $4–$5 gas prices since February, a sluggish housing market, a 25% correction in gold prices, and bonds once again failing to deliver the returns many expected. The market has had ample reasons to correct, and we did see a little pull-back in March. But so far, the prospects of better economic growth, accelerating corporate earnings and the potential of a major productivity boom due to the AI revolution have outweighed the headlines we’ve seen most of the year. If I’ve said it once, I’ve said it 100 times…you just can’t try to time the market. The last few years have just continued to remind us of how futile that effort can be.
But…I think we are laying the groundwork for a coming speculative asset bubble, at least as it relates to parts of the AI trade. So far in 2026, much of the AI enthusiasm has been concentrated in semiconductors, particularly the hardware and memory segments of the industry. You may have heard references to old school names like Micron Technology, Seagate Technology, Western Digital, Qualcomm, etc. These were stocks that were booming back in the 1995-2000 technology bull market, but they are back with a vengeance. Fortunately, they don’t represent a HUGE part of the overall market. On the other hand, the big names (i.e., Magnificent 7) have not done much in 2026. Apple, Amazon, Microsoft, Google and even Nvidia are largely underperforming the markets. From my vantage point, that’s a good thing and has kept a (potential) bubble in check.
Well, “in check” at least until last week, when the SpaceX IPO hit the market. I can’t remember seeing this level of excitement around an IPO since the late 1990s. And, while I’m sure SpaceX will be a great company in the long-run, some of the investor behavior surrounding the IPO (for a company that still loses BILLIONS of dollars, by the way) is starting to feel a bit bubble-like. Frankly, the lack of IPOs in recent years has been one reason why I wasn’t concerned about a tech bubble.SpaceX alone doesn’t change that. But with rumors that other TRILLION-dollar companies (OpenAI and Anthropic, to name two) could go public in 2026, I think we will be getting to bubble territory in the near future if we don’t see some caution return to the markets.
Don’t get me wrong, there are parts of the market that appear fairly valued. Bubbles in certain market sectors don’t mean the entire market has to suffer, but the longer a potential bubble builds, the larger market impact it may ultimately have. We aren’t there yet. In fact, there is very little that resembles the REAL tech bubble in the late 1990s, but I suspect that’s where we are eventually heading. So my encouragement is simple: don’t get too caught up in the excitement we’re seeing in certain corners of the market. History has shown that when investors become too complacent, the market has a way of teaching some painful lessons.
Until next time…
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