In this conversation, Steve and Grayson break down a recent article suggesting the stock market is overbought and explain why investors should focus on facts, not noise.

Debunking the Bubble Claim

Steve: An article published this morning claims the stock market might be in a bubble, referencing Alan Greenspan’s “irrational exuberance” term from years ago, which preceded a market sell-off. It cites Barclays’ internal system, suggesting stocks are overbought and beyond fundamentals. I think this is probably incorrect.

Based on my 35 years managing money, markets typically hit a high before a correction, then struggle to regain momentum for weeks. When that momentum fades, the market may sell off. We’re nowhere close to that now. Grayson, what are your thoughts on this article?

Grayson: When I started in finance at Georgia Southern, I read conflicting articles in the Wall Street Journal and Yahoo Finance—one predicting a correction, another a bull run. It’s hard to know who to believe without doing your own research or checking the facts.

This article reminds me of that confusion. Should we exit the market because of Barclays’ claims, or is this just daily noise from content creators trying to gain attention?

Why It’s Just Noise

Steve: Grayson, you’re on to something. This is noise. Writers need content, so they highlight Barclays’ system showing overbuying, then write about market exuberance and potential downfall. It’s nothing more than noise. Smart investors should ignore it.

Market Sector Performance

Steve: Looking at the 33 stock market sectors, the top performer is mining, up over 41%. Not the “magnificent 7” tech stocks as you’d expect. Grayson, what’s number two?

Grayson: Alcohol and tobacco, up 26% this year. That’s outperforming the market by about four times—pretty surprising.

Steve: That’s ridiculous. We screen out tobacco companies, and it’s been a long time since alcohol and tobacco led the market, like Philip Morris and RJ Reynolds did in the late ‘80s and early ‘90s. Technology stocks are only fifth or sixth on the list, though some AI and quantum computing stocks are doing well.

• Average return of the 33 sectors since January 1: 6.14%
• Median return: just over 4%

Grayson, why do we doubt this talk of irrational exuberance?

No Irrational Exuberance

Grayson: Excitement about the market’s future doesn’t mean it’s a bubble. Real irrational behavior shows up when unlikely sources—like the lady at the grocery store or the guy shining your shoes—start giving stock tips. That’s what to watch for.

Right now, people are recovering from a market pullback and worries about tariffs and international tensions. They’re rightfully happy about current trends and optimistic for the year. That doesn’t mean we should assume they’re wrong or that the market’s doomed.

Steve: Market strength often comes from solid company earnings, not irrational exuberance. It just means companies are doing well, driving the market up. Historically, market sentiment hasn’t been a reliable predictor of direction. So, take this article with a grain of salt—it’s just noise. Grayson, anything else our viewers should know before we wrap up?

Grayson: We could talk more, but I think we’ve covered the topic for today. Until next time, may God richly bless you.