Bubbles are popping. You hear it?

JC Parets
March 6, 2021

There's nothing like a good bubble popping to throw a wrench in everyone's plans.

The passive investor bubble popped. They're getting smoked and I think it only gets exponentially worse for them moving forward.

The U.S. home country bias is a bad one too. That one looks like it popped and about to get a whole lot worse for people who think the United States and The World are the same thing.

Bonds going up for 40 years? That's normal right? It's too early to call a generational turn. We can't make that call until 10s are holding above 3%. But it sure looks like that was it.

Meanwhile, the "Lack of Commodity Exposure" bubble is very apparent. I got in this business back in the day and was taught that there were 3 asset classes: Stocks Bonds & Commodities.

Commodities have done so poorly for so long that people just forgot it was an asset class. Is there a better landscape for a change in trend than after completely being eliminated from asset class status?

Pop! I think that one's over too.

And how about the Growth vs Value that we keep harping on? Some people have even gone as far as calling themselves "Growth Investors", because they forgot that there were other types of stocks that do very well in different types of environments.

Here's a peek at what this all looks like right now:

I think if you're caught up in any of those bubbles mentioned up top, you're probably going to have a harder time moving forward.

Now, that doesn't mean that stocks have to fall. When rates were rising in that 2004-2006 period, Value outperformed, Tech underperformed, International outperformed, etc.

Tech went up. Stocks went up. It's just that Tech & Growth got beat by everything else.

Here's your throwback:

I remember this period well.

It paid to own value. It paid to buy banks. It paid to buy gross old dirty energy stocks.

It was a different time. Good times, but just different.

What's wrong with that?

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