Lots of stock market bubbles have been compared to the lead up to the 1929 peak, most notably the 1990's dot-com boom. But the post covid tech-and-AI boom appears to be tracing the same path. Here is the chart:
How can you really tell when a bubble has reached it's peak? Old stock market hands said the indicator that a bull market was about to end was when the perma-bears who had been predicting a crash for many months or even years, finally threw in the towel, capitulated, and bought stocks at their most over-valued price. At that point there are no more fools to sell to.
And lo, we got such a signal last week. Warren Buffett, perma-bear on tech, finally capitulated and bought Google shares. Here is Google's chart:
Buffett could have bought Google shares at anytime in the last 20 years: when Google first floated on the Nasdaq in 2005; or in 2008/9 when the share price was unfairly dragged down by the Great Financial Crash, even though they were wildly profitable.
But he's chosen to do it now. When the stock price is at an all-time high, but the business isn't as profitable as it was because they're funnelling vast sums into loss-making AI.
People will say, "But it's Buffett, he's a genius". He's also a perma tech-bear who has finally capitulated. It's a bad sign.