Are we in a bubble or a hyper-bubble? What to do?

You will (almost) never hear a Wall Street firm state that the market is overvalued. Wall Street makes more money promoting a positive outlook even if it is incorrect.

Over the last three years, US market returns averaged over 25% annually, not adjusted for inflation. (26.89% in 2021, 18.40% in 2020, 31.49% in 2019)

Over the last two hundred  years, US market returns averaged about 10% annually, not adjusted for inflation.

Are we in bubble territory?

Don’t look to a Wall Street firm for the answer. See what renowned investors have to say on the subject.

Warren Buffett states that the market is significantly overvalued. Jeremy Grantham recently doubled his cash holdings. According to him, we are in a hyper bubble.

The market can stay irrational for a long time in both directions. It could keep rising, it’s overvaluation notwithstanding. Grantham is involved in market timing which is generally not a good idea. However, he is a renowned money manager and for good reasons.

So, what should we do?