Is There a Stock Market Bubble? Warning Signs Ahead
Every investor has heard the warning of a potential stock market bubble, yet high prices seem reasonable amidst soaring markets and optimistic expectations for future growth.
During a boom, warnings of bubbles and crashes are often dismissed, with proclamations such as
"we've entered a multi-year bull market"and
"there's so much money on the sidelines waiting to invest"taking center stage.
However, the latter statement overlooks a crucial point: when cash on the sidelines is used to buy stocks, it is given to vendors who swap shares for cash, meaning there must always be cash on the sidelines.
This article originally appeared in The Australian on October 6, 2025.
Author's summary: Warning signs of a stock market bubble exist.
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