B&D Update November 11, 2025: Bubble Trouble

In the 1990s, tech stocks soared to unprecedented heights—even though many companies had little to no revenue, let alone profits. Month after month, year after year, the rally continued. There were bouts of volatility, of course, but “buy the dip” investors eagerly snapped up more shares whenever there was a downturn. Sound familiar?

In a famous 1996 speech, Federal Reserve Chairman Alan Greenspan warned of “irrational exuberance” in the markets—a phrase that became legendary. His caution proved prescient, though his timing was early. The tech bubble kept inflating for three more years before bursting, triggering a brutal bear market from 2000 to 2002. During that period, the S&P 500 lost more than 50% of its value, and tech stocks fell even further.

Today, many clients ask us: Are we in an Artificial Intelligence (AI) bubble? Should we worry about a correction? Our answer: possibly—and yes—with an important caveat. The market was in a bubble in 1996, yet it climbed for years before the crash. If AI is in a bubble now, it could still run higher and longer than most expect.

Here’s the truth: Market timing is impossible. The pundits on TV and in magazines don’t know when corrections will happen. If they guess right, it’s luck—not skill. So what should investors do? One proven strategy is rebalancing. Use volatility to your advantage: trim profits when markets rise and add to positions when they fall.

We met many investors in the late 1990s who never took profits. They rode tech stocks all the way up—and all the way down. Had they rebalanced periodically, they would have fared far better. Human nature resists selling winners or paying taxes on gains, but history shows that those who ignore rebalancing often end up wondering what might have been.

For over four decades, staying balanced, diversified, and disciplined has served our clients well. It’s rarely the flashy, complicated strategies that deliver the best results—it’s the steady, time-tested ones.