Stock-Market Bubble Fears Are Greatly Overblown
Despite some pockets of excess, valuations today are nothing like those of the dot-com era.
In this case, sure, it might be a problem.
Photographer: Johannes Eisele/AFP/Getty IamgesAnyone paying attention to finance, markets and the economy doesn't have to look very hard to find complaints that we are on the cusp of a bubble of one type or another.
Perhaps the area most often targeted by the bubble believers is tech. I was curious about just how widespread this belief is: “Tech bubble” has doubled on Google Trends this year alone; Google News generates more than 3.6 million hits for the phrase.1
Defining a bubble isn't too hard and one will do as good as another. “A market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset. Bubbles are often hard to detect in real time because there is disagreement over the fundamental value of the asset,” Nasdaq says.