Financial markets are witnessing a renewed “everything bubble” as asset prices across equities, SPACs, NFTs and low‑quality cryptocurrencies climb to new highs, analysts say.
Key takeaways
- Broad asset inflation: Prices of meme stocks, special purpose acquisition companies, non‑fungible tokens and coins such as Dogecoin have surged again.
- Historical warning signs: In summer 2021, former Merrill Lynch quantitative strategist Richard Bernstein listed five factors that indicated a bubble was forming.
- Recent market peak: U.S. equities reached a ceiling later that year and entered a bear market in 2022.
- Higher downside risk: Experts note that the current cycle could produce sharper declines than the 2021 episode.
- Investor vigilance needed: Analysts advise monitoring valuation metrics and macro conditions before committing new capital.
Background
Five years ago, speculative trading dominated headlines. Meme stocks, SPACs, NFTs and dubious crypto tokens attracted retail and institutional money alike. Bernstein’s 2021 assessment highlighted rapid price appreciation, lax credit standards, excessive leverage, speculative sentiment and disconnect from fundamentals.
Market trajectory
After the 2021 peak, U.S. stock indices stalled and fell into a prolonged correction. The subsequent year saw a broad sell‑off, erasing many gains. Now, similar drivers are re‑emerging, pushing valuations upward across multiple asset classes.