Everyone knows the problem with bubble pronouncements, right?

If not, it’s simple: Declaring risk assets a bubble is tantamount to calling a top, and top-calling’s impossible.

Bubble-spotters hedge by claiming there’s a distinction. Pronouncing the existence of a bubble doesn’t preclude the bubble getting larger and “I’ll be the first to admit” (they always use that phraseology) that greed’s harder to dislodge than fear.

Of course, bubble declarations accompanied by caveats which explicitly allow for the possibility that risk-asset gains could continue in what may as well be perpetuity aren’t much use. Jeremy Grantham could attest to that if he were honest, but… well, suffice to say Grantham’s called a lot more tops spotted a lot more bubbles in his day than he’s seen crashes. Fortunately for Jeremy, you only have to be right once as a purveyor of crash propaganda to be considered a legend. If you can nail one such call, you get a free pass to be wrong going forward, forever.

Another thing about bubble-spotters is that they tend to suggest, implicitly and sometimes explicitly, that they don’t often go out on a limb to declare the existence of a bubble, a notion that’s easily disprovable by perusing their own commentaries which are almost always just a collection of intermittent bubble warnings.

Relatedly, bubble-spotters habitually construct straw men vis-à-vis the mainstream financial media, which is always characterized as complicit, oblivious or anyway not sufficiently attentive to bubble risk. I know that trick all too well: I’ve employed it in these pages on too many occasions to count over the years, and as such I can tell you it’s manifestly disingenuous.

How do mainstream financial media outlets make their money? With web traffic. And what generates web traffic? Bubble talk. Fearmongering. And the like. Trust me: No one in the business of monetizing financial content is averse to bubble-spotting. That sort of exercise — identifying speculative froth and claiming the sky’s probably falling — is what keeps the lights on at those outfits.

With all of that in mind, everyone’s back to bubble-spotting now that US stocks are back at records and the meme mania’s doing its best Donald Trump impression: “2.0: This time with 50% more crazy!”

There’s a chart. It shows the ratio of corporate equities, public and private, held by US investors as a share of (which in this case means as a multiple of) US GDP. On that metric, we’re back near levels observed in 2021, the year of meme mania “1.0,” the rise of Web3 and so on.

In his latest, JonesTrading’s Mike O’Rourke noted that if you add the “market cap” (and I use that term very loosely in the crypto context) of cryptocurrencies to the value of the S&P 500, the grand total works out to more than 200% of GDP. That’s just another way of saying the same thing the chart says, and both are iterations of the so-called “Buffett Indicator.”

O’Rourke went on to call mainstream media recognition of bubble risk “a pivotal event.” “[W]hen the media begins reporting about ‘Bubble’ risks, you are already in one,” he wrote.

Maybe. But I’d caution (again) that having known a lot of people in the financial media, both mainstream and “fringe,” I can say, definitively, that if anyone’s keen to spot bubbles, even when they aren’t there, it’s the media. Because their entire business model depends on crafting content that attracts attention.

O’Rourke also cited BofA’s Michael Hartnett which… well, I like Hartnett as much as the next guy but “Banks, Bonds, Booms, Bubbles” — the title of last week’s “Flow Show,” which O’Rourke cited — is something Hartnett probably came up with after half an hour of trying, and ultimately failing, to gestate something more witty. (“You know what? Forget it. Just call it ‘Banks, Bonds, Booms, Bubbles’ and let’s go home. Nobody cares, it’s the middle of July.”)

I’m not suggesting we aren’t witnessing a bubble (is that a double negative?). Neither am I suggesting we are. Because, coming full circle, it’s impossible to pronounce confidently on a such a thing without the sort of caveats that render the pronouncement nugatory.

For his part, O’Rourke noted that “identifying the Bubble does not necessarily mean its bursting is imminent,” only that “purchases made during the Bubble environment generally wind up being losers. Caveat emptor.”