The same way the stock market invents a trillion dollars of fake wealth on a strong up day?

That's capital markets working as intended. It's not necessarily doomed to end in a fiery crash, although corrections along the way are a natural part of the process.

It seems very bubbly to me, but not dotcom level bubbly. Not yet anyway. Maybe we're in 1998 right now.

The stock market isn't inventing money. Those investing in the stock market might be, those buying on leverage for example.

Capital markets weren't intended for round trip schemes. If a company on paper hands 100B to another company who gives it back to the first company, that money never existed and that is capital markets being defrauded rather than working as expected.

I think it's worse. The US market feels like a casino to me right now and grift is at an all time high. We're not getting good economic data, it's super unpredictable, and private equity is a disaster waiting to happen IMO. For sure there are smart people able to make money on the gamble, but it's not my jam.

I don't tend to benefit from my predictions as things always take longer to unfold than I think they will, but I'm beyond bearish at present. I'd rather play blackjack.

More money is lost by bears fighting a bull market, than in actual bear market crashes.

I’ve made that mistake already.

I’m nervous about the economic data and the sky high valuations, but I’ll invest with the trend until the trend changes.

> It seems very bubbly to me, but not dotcom level bubbly.

Not? Money is thrown after people without really looking at the details, just trying to get in on the hype train? That's exactly how the dotcom bubble felt like.

Nvidia has a trailing PE of 50. Cisco was 200 At the height of the dotcom bubble.

Nowhere near that level. There’s real demand and real revenue this time.

It won’t grow as fast as investors expect, which makes it a bubble if I’m right about that. But not comparable to the dotcom bubble. Not yet anyway.

We shouldn't judge whether an indicator is stable or okay only by looking to see if its the highest historical value.

PE ratios of 50 make no sense, there is no justification for such a ratio. At best we can ignore the ratio and say PE ratios are only useful in certain situations and this isn't one of them.

Imagine if we applied similar logic to other potential concerns. Is a genocide of 500,000 people okay because others have done drastically more?

I’m not asking if it makes sense, I’m simply pointing out that by that measure this is much less extreme than 2000. As I stated, I think we’re in a bubble, so valuations won’t make much sense.

If you have a better measure, share it. I trust data more than your or my feelings on the matter.

Unless you have evidence that this measure of yours is a reliable predictor of how big a bubble is, it's on par with my gut feeling.

I sell you a cat for $1B and you sell me a dog for $1B and now we’re both billionaires! Whether the capital markets “want” that or not it’s still silly.

If we’re both willing to pay that in a free market economy, then we both leave the deal happy.

Things are worth what people are willing to pay for them. And that can change over time.

Sentiment matters more than fundamental value in the short term.

Long term, on a timescale of a decade or more, it’s different.

> If we’re both willing to pay that in a free market economy

The thing is: you've paid nothing - all you did was trade pets and played an accounting trick to make them seem more valuable than they are.

Is that not fraud?

Yes, it is fraud round tripping is fraud, whether the government is willing to prosecute it or not.

Both parties would need the $1B prior to the transaction for it to even potentially be meaningful, and still they just traded a cat for a dog and only paid each other on paper.

That ultimately wouldn't be a big deal if the paper valuation from the trade didn't matter. As it stands, though, both parties could log it as both revenue and expenses, and being public companies their valuation, and debt they can borrow against it, is based in part on revenue numbers. If the number was meaningless who cares, but the numbers aren't meaningless and at such a scale they can impact the entire economy.

No, only one party needed a billion dollars, they just needed to execute that trade first.

Actually, thinking more about it, if they both agreed the cat and dog were worth a billion dollars ahead of time, neither one would actually need that billion dollars as liquid cash, it could be an all-animal transaction.