WEBVTT
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TGIF, everyone.
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It's Friday, November 6th, 2026.
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This week's topic, how bubbles burst revisited.
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But before we start, here's a word from our attorneys.
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The information and opinions presented in this podcast, including the views of guests not affiliated with the Blue Spring Wealth, are for general informational and educational purposes only and should not be considered investment in tax or legal advice.
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Any references to specific securities of the sectors, industries, products, or services, do not constitute a recommendation or endorsement.
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All investments involve risk, including the possible loss of principle.
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Listeners should consult their own financial professionals before making any financial decisions.
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But I suppose even the most optimistic Democrats didn't anticipate this outcome.
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The results were crystal clear.
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As one of our Washington sources put it, quote, this was a wipeout of historical proportion, end quote.
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It was absolutely market moving.
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The market's initial reaction was lower.
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The overnight futures had the SP 500 down nearly two percent.
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It didn't last.
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Wednesday morning brought an explosive rally, with the Dow leading the charge, surging 1,500 points.
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It was the best day on the year for stocks.
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Then came Thursday.
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All of those gains, and then some, were erased.
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Tech definitely got it worst.
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The AI trade officially broke.
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There had been cracks for weeks, but the aftermath of the midterm election saw the bubble finally burst.
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A whopping$2.5 trillion was taken out from the tech heavy NASDAQ.
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It was the worst intraday drop since the height of the COVID-19 pandemic in March 2020.
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It was its largest point decline ever.
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Importantly, the NAS had already trailed the Dow and SP the prior day.
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Honestly, Wednesday was a curious move higher.
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Wall Street is expected to experience much more oversight now with the Democrat controlled Congress.
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The market doesn't usually like that.
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The Democrats have much bigger numbers than expected.
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That helps explain some of Thursday's decline.
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But there's much more.
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AI was on the ballot too.
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The massive data center build is flashing yellow and in some states red.
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The market reaction was telling.
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The tech titans, led by Amazon, Microsoft, and Google, saw their stocks rally Wednesday while the AI infrastructure stock sold off.
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The thinking on this was the Tech Titans already corrected in response to earnings reports and were primed for a bounce.
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In addition, Amazon, Microsoft, and Google are the entrenched companies in existing data centers who are providing the computing power for AI.
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These are the companies that have the servers and the market share and are extremely well capitalized to continue.
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Plus, a reduced AI buildout would result in a return to free cash flow positivity for the tech titans.
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The market likes those prospects.
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The newer AI players are dependent on the new data center builds, which created the opportunities for growth.
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If they stall or get stopped, that's bad for those companies.
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Thursday's sell-off was bad for nearly all companies.
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Expect a lot more scrutiny on AI with this new Congress.
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It's already started.
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Bottom line, it's going to cost more and take longer.
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That will most certainly slow revenues and earnings, which the market is no doubt now grappling with.
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The AI boom had already entered the more challenging stage.
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The aggressive spending had been coming from cash flow.
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Then it turned to debt.
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That made for a tricky path forward when inflation and higher interest rates rule the day.
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Tightening credit conditions, rising infrastructure costs, and tougher regulation threaten weaker projects.
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Speculation faces gravity.
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That is generally bad for smaller companies and those dependent on debt to grow.
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The market has finally started paying attention to risk.
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Capital is likely to concentrate among large companies with stronger balance sheets and more predictable revenue streams.
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That's what's happening now.
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Friday brought a bit of a reprieve.
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It scratched a little bit back, the Dow was red.
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The stuff that got beat up the most generally won the day.
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They definitely lost the week.
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There was a lot of damage done.
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It was fast and furious.
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We had been expecting a pickup in volatility, though admittedly we didn't anticipate anything like what Wednesday and Thursday brought.
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Oversold bounces are likely as we head towards year end, but it seems to us that the market still has some unfinished business.
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We do see more corrective price action ahead.
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And the setup for 2027 now looks even more tricky.
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Asset bubbles aren't exactly rare, though they don't occur all that often.
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But when they have, it's been quite impactful for investors.
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Over the summer, I wrote about the expanding AI bubble with context to others throughout history.
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It was titled How Bubbles Burst.
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I recirculated it to the team this morning for reference.
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I thought it might be useful for you too to revisit it, should you choose.
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It went like this how bubbles burst.
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The SP 500 hit another fresh new high this week.
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That is the twenty seventh for the year.
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We are smack dab in the middle of another historic tech boom.
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It's an AI revolution.
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It took off at the end of 2022.
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This is the digital age.
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The advancement has been palpable.
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The money spent is unprecedented.
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The hype and expectations are out of this world, literally.
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Space is the next frontier for tech.
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But gravity still applies on planet Earth.
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It's a law that's as powerful as any.
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There was an announcement made this week that the stock market embraced but gave us some serious pause.
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Nvidia is partnering with a group of Wall Street firms on a$500 billion plan with the stated goal of standardizing the cost of buying chips.
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They are essentially creating asset-backed pools of capital for AI companies.
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There is talk of securitizing a new class of digital assets.
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It sounds similar to the securitization of loans tied to cars, planes, credit cards, and mortgages, which were rolled out in the 1980s and 90s.
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The goal here is not to help the Tech Titans like Amazon, Google, and Microsoft.
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They are well capitalized with strong balance sheets and significant operating leverage.
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This arrangement is designed for smaller organizations that have the demand for NVIDIA chips but face higher borrowing costs.
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It will help expand the use of AI well beyond the Tech Titans so smaller businesses can participate and benefit too.
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Throughout this run, demand has consistently outstripped supply.
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It appears it still is.
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That's the bull case.
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The skeptics here say this is a fabricated way to extend the AI spending boom at its current torrid pace.
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An important consideration is the fact that innovation keeps moving at such a rapid rate.
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The chips that will be used as collateral could be considered obsolete within a couple of years.
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That's a risk for investors buying the debt.
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That's the bear case.
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Many have drawn comparisons to this AI boom in the dot com days.
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They both can be characterized as periods of speculative enthusiasm for game-changing technological advancement.
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They both saw a massive build-out of infrastructure, but they have been fundamentally different in corporate profitability, structure, and the mechanics of its funding.
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The dot-com revolution was in many ways a speculative frenzy of cash-burning startups that raced to go public.
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The technology was real and survivors have thrived, changing the way we live our lives.
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The bubble was in the excessive spending and stock market surge represented by new companies that had no plans to be profitable.
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This AI revolution is being driven by a concentrated build-out led by the highly profitable tech titans.
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And private companies have stayed private much longer.
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The dot com bubble burst when the internet startups ran out of cash and venture capital stopped funding.
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Remember Pets.com, spending$1.2 million on that Super Bowl ad?
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The company failed within 10 months.
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Also contributing to the bubble burst was the hangover from the aggressive Y2K spend and the excessive rollout of fiber optic cables.
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New advancements allowed vast data to be squeezed through fewer pipes, rendering the excess capacity unnecessary.
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Telecom companies like Lucent, Nortel, and JDS Uniphase sunk.
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What's more, the Fed started raising interest rates in attempts to cool the euphoria.
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The Fed funds went from 4.75% to 6.5%, peaking in May of 2000.
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The party had already ended in March, but so significant the innovative companies like Amazon, Apple, and Google saw opportunity amidst the rubble.
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They repositioned and reinvented themselves time and again.
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These small startups became tech titans.
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The late 1990s were defined by startups chasing growth with limited revenue and easy access to capital.
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Today's AI expansion looks very different.
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The world's largest tech companies have been aggressively reinvesting their substantial free cash flow into physical infrastructure because they view AI as essential to their long-term competitiveness.
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What has the market a bit uneasy is the size and unknown length of the spending.
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This year has seen an acceleration of that spend, leaving some companies cash flow negative for the first time and borrowing what they don't earn in order to capitalize on this generational technology boom.
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Nearly$350 billion in debt has been issued by Silicon Valley companies already this year, with another$100 billion expected by year's end.
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That would amount to roughly three times the amount borrowed last year to spend on the AI boom.
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The good news is those bonds have been slurped up quickly with strong demand for high quality debt.
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But everything has a price.
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Yields keep rising.
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The cost to borrow is more expensive.
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The bond market is eyeing this like a hawk.
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Here's another consideration.
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The onslaught of investment grade corporate bond issuance is competing for investment dollars typically geared for treasuries.
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At a time when America's federal debt has reached$40 trillion and an annual deficit of$2 trillion, it's getting more expensive just to maintain.
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It costs$1.3 trillion in interest payments just to service America's debt.
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This week's 30-year treasury auction came at the highest cost in two and a half decades.
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Uncle Sam has had a spending problem for years now, with no evidence of intent to pay it down.
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Foreign buyers have also cut their treasury purchases of late, with many opting to build gold reserves instead.
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Demand for American dollars in treasuries around the world has shifted quite a bit.
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Fitch just reiterated America's double A plus credit.
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Remember, it lost its triple A status.
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It's still extremely high quality.
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However, the credit rating agency warned the country is, quote, vulnerable to economic shocks due to its high fiscal deficits, end quote.
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The United States federal debt is more than double the median of similar nations.
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Building infrastructure has been a quintessential American investment theme.
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Long before the advancement of the internet was the expansion of the railroad.
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The railroad boom during the Industrial Revolution in the 19th century brought massive investment to connect the country from coast to coast.
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It opened up markets for commerce as well as travel and communications.
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It kickstarted America's modern economy.
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It forever changed the American way of life, but it also triggered feverish speculation.
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Despite all its benefits of advancement, the railroad boom eventually went bust due to heavy debt financing, overbuilding of duplicate tracks in anticipation of demand, and a sudden credit crunch.
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In the late 1800s, companies relied on bonds rather than equity for financing.
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Less than 1% of Americans owned stocks back then.
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Institutions weren't large investors either, the way they are today.
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The banks were the primary lenders.
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The heavy reliance on debt meant that even minor revenue declines forced widespread corporate bankruptcies.
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The spending was massive and disorganized.
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Money was recklessly chasing opportunity.
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Companies laid thousands of miles of unneeded track through sparsely populated regions.
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Revenues didn't follow.
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Railroad companies didn't generate enough freight or passenger ticket sales to cover their costs.
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Rising interest rates and tighter credit markets pricked that speculative bubble.
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There were nearly 2,000 railroad companies in America.
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Roughly one quarter of them defaulted and crashed into bankruptcy.
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It was quite a train wreck, pun intended.
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Railway insolvencies dragged down regional banks and thousands of other businesses.
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It was widely felt throughout the economic system.
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But that was opportunity too.
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The surviving deep pocketed financiers bought up bankrupt, discounted railroad companies for pennies on the dollar.
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They merged the fragmented tracks into unified regional systems.
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It was called Morganization.
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A guy named JP Morgan led that charge.
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The result was a more organized and efficient transcontinental system, which was the backbone to our nation's economy.
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But it also drove out competition.
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Trust ownerships were established, monopolistic tendencies emerged.
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That's a subject for another day.
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These three revolutions, railroad, internet, and AI, are similar in speculative euphoria and massive upfront capital requirements.
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Money chased opportunity, but they certainly have their differences.
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That's history's rhyme versus repeat.
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The early railroad tycoons laid duplicate parallel tracks across the open plains before traffic existed.
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Today's tech leaders are aggressively building massive data centers before the anticipated robust revenue materializes.
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Historically, the greatest success stories came for those that supplied the raw physical infrastructure.
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Think steel, land, and trains, picks and shovels during the gold rush.
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Those that used the system to capitalize on consumer demand benefited too.
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Levi Strauss and Sears Roebuck are examples here.
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It wasn't the transportation companies that made it big at first.
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The early winners of this AI revolution have been the companies that are building the foundational hardware, like semiconductors, data centers, and power providers.
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When the rail bubble burst, the underlying track still remained in place.
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That connected the country and served as the backbone for decades of sustained economic growth.
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The probabilities are high that even when a major AI correction occurs, it will leave behind a highly advanced grid of data centers, power infrastructure, and digital networks that will fuel the next generation of computing.
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The digital age will reset and go on.
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This AI rally definitely fits the description of a bubble, but history has proven bubbles can last for a while.
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Remember, it was in December of 1996 that then Fed chair Alan Greenspan delivered his irrational exuberant speech.
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That was three and a half years before the dot com bubble burst in the spring of 2000.
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The SP doubled in price during that time before the bear market took over.
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There is a pattern here.
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As one of my favorite Americans, Sam Clemens once said, history doesn't repeat itself, but it often rhymes.
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Raising debt to pay for growth has been the fuel for many of our nation's advancements.
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It's also been the culprit for boom and bust cycles.
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The July sell-off went a long way to correct the excesses in this bull market led by tech.
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That was healthy.
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It created a reset, but it could prove to be a sneak preview into what ultimately lies ahead.
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We don't think it's a 2026 event.
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We're not even sure if a bigger correction occurs in 2027 either.
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What we are sure of is excessive borrowing at high cost does have limits.
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It's like gravity for stocks.
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The bond market has our attention.
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We get paid to anticipate.
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We embrace and take comfort in the fact that the stock market has repeatedly hit fresh, all-time highs, including another one Thursday.
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It's been great to see all the green on the screen.
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Equally important, we have our eyes fixated on what tomorrow brings.
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Earnings growth has been nothing short of stellar so far.
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This ignited the rally further.
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The big question is how long this lasts.
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It's seldom a smooth and straight line for investors.
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Gravity is powerful.
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When the facts change, so do we.
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Whatever the case, we are ready for whatever comes our way.
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Back to the present.
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Have a nice weekend.
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We'll be back dark and early on Monday.
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Our offices will be closed on Wednesday in honor of our nation's veterans.
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The bond market will be closed, but the stock market will be open.
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Rest assured, members of our team will be at the ready to transact should it be necessary.
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I'm Mike Frasier.
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TGIF, everyone.
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It's Friday, November 6th, 2026.
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This week's topic, how bubbles burst revisited.
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But before we start, here's a word from our attorneys.
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The information and opinions presented in this podcast, including the views of guests not affiliated with the Blue Spring Wealth, are for general informational and educational purposes only and should not be considered investment in tax or legal advice.
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Any references to specific securities of the sectors, industries, products, or services, do not constitute a recommendation or endorsement.
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All investments involve risk, including the possible loss of principle.
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Listeners should consult their own financial professionals before making any financial decisions.
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But I suppose even the most optimistic Democrats didn't anticipate this outcome.
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The results were crystal clear.
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As one of our Washington sources put it, quote, this was a wipeout of historical proportion, end quote.
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It was absolutely market moving.
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The market's initial reaction was lower.
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The overnight futures had the SP 500 down nearly two percent.
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It didn't last.
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Wednesday morning brought an explosive rally, with the Dow leading the charge, surging 1,500 points.
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It was the best day on the year for stocks.
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Then came Thursday.
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All of those gains, and then some, were erased.
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Tech definitely got it worst.
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The AI trade officially broke.
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There had been cracks for weeks, but the aftermath of the midterm election saw the bubble finally burst.
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A whopping$2.5 trillion was taken out from the tech heavy NASDAQ.
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It was the worst intraday drop since the height of the COVID-19 pandemic in March 2020.
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It was its largest point decline ever.
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Importantly, the NAS had already trailed the Dow and SP the prior day.
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Honestly, Wednesday was a curious move higher.
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Wall Street is expected to experience much more oversight now with the Democrat controlled Congress.
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The market doesn't usually like that.
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The Democrats have much bigger numbers than expected.
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That helps explain some of Thursday's decline.
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But there's much more.
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AI was on the ballot too.
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The massive data center build is flashing yellow and in some states red.
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The market reaction was telling.
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The tech titans, led by Amazon, Microsoft, and Google, saw their stocks rally Wednesday while the AI infrastructure stock sold off.
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The thinking on this was the Tech Titans already corrected in response to earnings reports and were primed for a bounce.
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In addition, Amazon, Microsoft, and Google are the entrenched companies in existing data centers who are providing the computing power for AI.
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These are the companies that have the servers and the market share and are extremely well capitalized to continue.
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Plus, a reduced AI buildout would result in a return to free cash flow positivity for the tech titans.
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The market likes those prospects.
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The newer AI players are dependent on the new data center builds, which created the opportunities for growth.
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If they stall or get stopped, that's bad for those companies.
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Thursday's sell-off was bad for nearly all companies.
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Expect a lot more scrutiny on AI with this new Congress.
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It's already started.
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Bottom line, it's going to cost more and take longer.
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That will most certainly slow revenues and earnings, which the market is no doubt now grappling with.
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The AI boom had already entered the more challenging stage.
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The aggressive spending had been coming from cash flow.
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Then it turned to debt.
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That made for a tricky path forward when inflation and higher interest rates rule the day.
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Tightening credit conditions, rising infrastructure costs, and tougher regulation threaten weaker projects.
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Speculation faces gravity.
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That is generally bad for smaller companies and those dependent on debt to grow.
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The market has finally started paying attention to risk.
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Capital is likely to concentrate among large companies with stronger balance sheets and more predictable revenue streams.
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That's what's happening now.
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Friday brought a bit of a reprieve.
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It scratched a little bit back, the Dow was red.
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The stuff that got beat up the most generally won the day.
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They definitely lost the week.
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There was a lot of damage done.
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It was fast and furious.
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We had been expecting a pickup in volatility, though admittedly we didn't anticipate anything like what Wednesday and Thursday brought.
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Oversold bounces are likely as we head towards year end, but it seems to us that the market still has some unfinished business.
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We do see more corrective price action ahead.
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And the setup for 2027 now looks even more tricky.
00:04:14.719 --> 00:04:18.560
Asset bubbles aren't exactly rare, though they don't occur all that often.
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But when they have, it's been quite impactful for investors.
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Over the summer, I wrote about the expanding AI bubble with context to others throughout history.
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It was titled How Bubbles Burst.
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I recirculated it to the team this morning for reference.
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I thought it might be useful for you too to revisit it, should you choose.
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It went like this how bubbles burst.
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The SP 500 hit another fresh new high this week.
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That is the twenty seventh for the year.
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We are smack dab in the middle of another historic tech boom.
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It's an AI revolution.
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It took off at the end of 2022.
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This is the digital age.
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The advancement has been palpable.
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The money spent is unprecedented.
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The hype and expectations are out of this world, literally.
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Space is the next frontier for tech.
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But gravity still applies on planet Earth.
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It's a law that's as powerful as any.
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There was an announcement made this week that the stock market embraced but gave us some serious pause.
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Nvidia is partnering with a group of Wall Street firms on a$500 billion plan with the stated goal of standardizing the cost of buying chips.
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They are essentially creating asset-backed pools of capital for AI companies.
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There is talk of securitizing a new class of digital assets.
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It sounds similar to the securitization of loans tied to cars, planes, credit cards, and mortgages, which were rolled out in the 1980s and 90s.
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The goal here is not to help the Tech Titans like Amazon, Google, and Microsoft.
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They are well capitalized with strong balance sheets and significant operating leverage.
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This arrangement is designed for smaller organizations that have the demand for NVIDIA chips but face higher borrowing costs.
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It will help expand the use of AI well beyond the Tech Titans so smaller businesses can participate and benefit too.
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Throughout this run, demand has consistently outstripped supply.
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It appears it still is.
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That's the bull case.
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The skeptics here say this is a fabricated way to extend the AI spending boom at its current torrid pace.
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An important consideration is the fact that innovation keeps moving at such a rapid rate.
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The chips that will be used as collateral could be considered obsolete within a couple of years.
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That's a risk for investors buying the debt.
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That's the bear case.
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Many have drawn comparisons to this AI boom in the dot com days.
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They both can be characterized as periods of speculative enthusiasm for game-changing technological advancement.
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They both saw a massive build-out of infrastructure, but they have been fundamentally different in corporate profitability, structure, and the mechanics of its funding.
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The dot-com revolution was in many ways a speculative frenzy of cash-burning startups that raced to go public.
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The technology was real and survivors have thrived, changing the way we live our lives.
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The bubble was in the excessive spending and stock market surge represented by new companies that had no plans to be profitable.
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This AI revolution is being driven by a concentrated build-out led by the highly profitable tech titans.
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And private companies have stayed private much longer.
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The dot com bubble burst when the internet startups ran out of cash and venture capital stopped funding.
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Remember Pets.com, spending$1.2 million on that Super Bowl ad?
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The company failed within 10 months.
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Also contributing to the bubble burst was the hangover from the aggressive Y2K spend and the excessive rollout of fiber optic cables.
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New advancements allowed vast data to be squeezed through fewer pipes, rendering the excess capacity unnecessary.
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Telecom companies like Lucent, Nortel, and JDS Uniphase sunk.
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What's more, the Fed started raising interest rates in attempts to cool the euphoria.
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The Fed funds went from 4.75% to 6.5%, peaking in May of 2000.
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The party had already ended in March, but so significant the innovative companies like Amazon, Apple, and Google saw opportunity amidst the rubble.
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They repositioned and reinvented themselves time and again.
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These small startups became tech titans.
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The late 1990s were defined by startups chasing growth with limited revenue and easy access to capital.
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Today's AI expansion looks very different.
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The world's largest tech companies have been aggressively reinvesting their substantial free cash flow into physical infrastructure because they view AI as essential to their long-term competitiveness.
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What has the market a bit uneasy is the size and unknown length of the spending.
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This year has seen an acceleration of that spend, leaving some companies cash flow negative for the first time and borrowing what they don't earn in order to capitalize on this generational technology boom.
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Nearly$350 billion in debt has been issued by Silicon Valley companies already this year, with another$100 billion expected by year's end.
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That would amount to roughly three times the amount borrowed last year to spend on the AI boom.
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The good news is those bonds have been slurped up quickly with strong demand for high quality debt.
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But everything has a price.
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Yields keep rising.
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The cost to borrow is more expensive.
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The bond market is eyeing this like a hawk.
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Here's another consideration.
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The onslaught of investment grade corporate bond issuance is competing for investment dollars typically geared for treasuries.
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At a time when America's federal debt has reached$40 trillion and an annual deficit of$2 trillion, it's getting more expensive just to maintain.
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It costs$1.3 trillion in interest payments just to service America's debt.
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This week's 30-year treasury auction came at the highest cost in two and a half decades.
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Uncle Sam has had a spending problem for years now, with no evidence of intent to pay it down.
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Foreign buyers have also cut their treasury purchases of late, with many opting to build gold reserves instead.
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Demand for American dollars in treasuries around the world has shifted quite a bit.
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Fitch just reiterated America's double A plus credit.
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Remember, it lost its triple A status.
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It's still extremely high quality.
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However, the credit rating agency warned the country is, quote, vulnerable to economic shocks due to its high fiscal deficits, end quote.
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The United States federal debt is more than double the median of similar nations.
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Building infrastructure has been a quintessential American investment theme.
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Long before the advancement of the internet was the expansion of the railroad.
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The railroad boom during the Industrial Revolution in the 19th century brought massive investment to connect the country from coast to coast.
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It opened up markets for commerce as well as travel and communications.
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It kickstarted America's modern economy.
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It forever changed the American way of life, but it also triggered feverish speculation.
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Despite all its benefits of advancement, the railroad boom eventually went bust due to heavy debt financing, overbuilding of duplicate tracks in anticipation of demand, and a sudden credit crunch.
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In the late 1800s, companies relied on bonds rather than equity for financing.
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Less than 1% of Americans owned stocks back then.
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Institutions weren't large investors either, the way they are today.
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The banks were the primary lenders.
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The heavy reliance on debt meant that even minor revenue declines forced widespread corporate bankruptcies.
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The spending was massive and disorganized.
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Money was recklessly chasing opportunity.
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Companies laid thousands of miles of unneeded track through sparsely populated regions.
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Revenues didn't follow.
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Railroad companies didn't generate enough freight or passenger ticket sales to cover their costs.
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Rising interest rates and tighter credit markets pricked that speculative bubble.
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There were nearly 2,000 railroad companies in America.
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Roughly one quarter of them defaulted and crashed into bankruptcy.
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It was quite a train wreck, pun intended.
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Railway insolvencies dragged down regional banks and thousands of other businesses.
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It was widely felt throughout the economic system.
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But that was opportunity too.
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The surviving deep pocketed financiers bought up bankrupt, discounted railroad companies for pennies on the dollar.
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They merged the fragmented tracks into unified regional systems.
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It was called Morganization.
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A guy named JP Morgan led that charge.
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The result was a more organized and efficient transcontinental system, which was the backbone to our nation's economy.
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But it also drove out competition.
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Trust ownerships were established, monopolistic tendencies emerged.
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That's a subject for another day.
00:11:49.600 --> 00:11:56.879
These three revolutions, railroad, internet, and AI, are similar in speculative euphoria and massive upfront capital requirements.
00:11:57.120 --> 00:12:00.320
Money chased opportunity, but they certainly have their differences.
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That's history's rhyme versus repeat.
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The early railroad tycoons laid duplicate parallel tracks across the open plains before traffic existed.
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Today's tech leaders are aggressively building massive data centers before the anticipated robust revenue materializes.
00:12:14.799 --> 00:12:19.679
Historically, the greatest success stories came for those that supplied the raw physical infrastructure.
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Think steel, land, and trains, picks and shovels during the gold rush.
00:12:24.080 --> 00:12:27.679
Those that used the system to capitalize on consumer demand benefited too.
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Levi Strauss and Sears Roebuck are examples here.
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It wasn't the transportation companies that made it big at first.
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The early winners of this AI revolution have been the companies that are building the foundational hardware, like semiconductors, data centers, and power providers.
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When the rail bubble burst, the underlying track still remained in place.
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That connected the country and served as the backbone for decades of sustained economic growth.
00:12:50.159 --> 00:13:01.039
The probabilities are high that even when a major AI correction occurs, it will leave behind a highly advanced grid of data centers, power infrastructure, and digital networks that will fuel the next generation of computing.
00:13:01.200 --> 00:13:03.279
The digital age will reset and go on.
00:13:03.519 --> 00:13:09.200
This AI rally definitely fits the description of a bubble, but history has proven bubbles can last for a while.
00:13:09.360 --> 00:13:16.559
Remember, it was in December of 1996 that then Fed chair Alan Greenspan delivered his irrational exuberant speech.
00:13:16.720 --> 00:13:20.879
That was three and a half years before the dot com bubble burst in the spring of 2000.
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The SP doubled in price during that time before the bear market took over.
00:13:25.120 --> 00:13:26.240
There is a pattern here.
00:13:26.399 --> 00:13:32.559
As one of my favorite Americans, Sam Clemens once said, history doesn't repeat itself, but it often rhymes.
00:13:32.720 --> 00:13:36.799
Raising debt to pay for growth has been the fuel for many of our nation's advancements.
00:13:36.960 --> 00:13:39.519
It's also been the culprit for boom and bust cycles.
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The July sell-off went a long way to correct the excesses in this bull market led by tech.
00:13:44.399 --> 00:13:45.360
That was healthy.
00:13:45.519 --> 00:13:50.639
It created a reset, but it could prove to be a sneak preview into what ultimately lies ahead.
00:13:50.799 --> 00:13:52.960
We don't think it's a 2026 event.
00:13:53.120 --> 00:13:56.720
We're not even sure if a bigger correction occurs in 2027 either.
00:13:56.879 --> 00:14:00.559
What we are sure of is excessive borrowing at high cost does have limits.
00:14:00.639 --> 00:14:02.159
It's like gravity for stocks.
00:14:02.320 --> 00:14:04.080
The bond market has our attention.
00:14:04.240 --> 00:14:05.759
We get paid to anticipate.
00:14:05.919 --> 00:14:12.639
We embrace and take comfort in the fact that the stock market has repeatedly hit fresh, all-time highs, including another one Thursday.
00:14:12.799 --> 00:14:15.039
It's been great to see all the green on the screen.
00:14:15.200 --> 00:14:18.639
Equally important, we have our eyes fixated on what tomorrow brings.
00:14:18.879 --> 00:14:21.600
Earnings growth has been nothing short of stellar so far.
00:14:21.840 --> 00:14:23.519
This ignited the rally further.
00:14:23.679 --> 00:14:25.679
The big question is how long this lasts.
00:14:25.840 --> 00:14:28.320
It's seldom a smooth and straight line for investors.
00:14:28.480 --> 00:14:29.759
Gravity is powerful.
00:14:29.919 --> 00:14:31.919
When the facts change, so do we.
00:14:32.159 --> 00:14:35.039
Whatever the case, we are ready for whatever comes our way.
00:14:35.279 --> 00:14:36.240
Back to the present.
00:14:36.399 --> 00:14:37.440
Have a nice weekend.
00:14:37.519 --> 00:14:39.519
We'll be back dark and early on Monday.
00:14:39.679 --> 00:14:43.200
Our offices will be closed on Wednesday in honor of our nation's veterans.
00:14:43.360 --> 00:14:46.240
The bond market will be closed, but the stock market will be open.
00:14:46.399 --> 00:14:50.080
Rest assured, members of our team will be at the ready to transact should it be necessary.
00:14:50.320 --> 00:14:51.440
I'm Mike Frasier.
