The myth that talking about bubbles prevents bubbles

Is the stock market in an AI bubble? You probably hear that question a lot. Some argue that all this bubble talk implies that we’re not in a bubble. Cathie Wood, CEO of ARK, recently said:[1]

The fact that so many people are worried that we are in an AI hype cycle like the tech and telecom bubble actually reassures me. It's a question we get all the time and it's very different from what happened during the tech and telecom bubble.

Her “Chief Futurist” Brett Hinton added:

If everybody's asking about a bubble, it's hard for it to be a bubble.

These statements are incorrect. Centuries of financial history show that the opposite is true: When everybody’s asking about a bubble, that’s a strong sign that a bubble is indeed occurring. Bubbles are not a secret to the people experiencing them.

Consider the Mississippi Bubble and the South Sea Bubble, both occurring around 1720. At their peaks, both were widely discussed, debated, celebrated, and condemned. We’ve got tons of contemporaneous poems, songs, essays, and letters. Bubbles are social phenomena involving narratives and ideas spreading through the population.

Next, consider the U.S. stock market bubble peaking in 1929. Here’s coverage from The New York Times:

• February 17, 1929. Broker Defends Stock Speculation; Assails “Gambling” Charge.
• April 30, 1929. Tells Business Men Speculative Mania is Peril to Nation.
• June 5, 1929. Reserve Board Attacked, Speculative Orgy Decried, in Stormy Senate Debate

In 1929, everybody was arguing about whether the stock market was in a speculative bubble, although they rarely used the word “bubble.”

Fast forward to the period 1999 to 2000, and the word “bubble” had now come into widespread use. Here’s the NYT coverage:

• January 6, 1999. Economists Reject Notion Of Stock Market 'Bubble.'
• March 2, 2000. Amid Market's Mania, Warnings About Asia's Internet Future. It sounds like a bubble, it looks like a bubble, and it feels like a bubble.
• March 31, 2000. Modigliani's Message: It's a Bubble, and Bubbles Will Burst. Dr. Modigliani began selling stocks about a year ago, and has no apologies. ''The only people who did well in 1929 were those who sold too soon,'' he said. ''The final test will be if the collapse comes. If it doesn't come, I'm wrong.''

Davos provides a useful barometer of prevailing market narratives in different years. Here’s NYT Davos coverage from 1999 and 2000:

• February 3, 1999. Is That a Bubble, or Is the Outlook Fabulous? Bubble talk is back. From Davos, where Microsoft's Bill Gates was expressing bewilderment as to why people would pay so much for Internet stocks …
• January 28, 2000. Davos Forum Opens With Qualified Exuberance. Abby Joseph Cohen, the Goldman, Sachs market strategist, said soaring United States stock prices were not overvalued … As if to punctuate the initial exuberance of the conference, the Boston Philharmonic's conductor, Benjamin Zander, led participants in a rousing rendition of Beethoven's ''Ode to Joy.''

Looking specifically at the word “bubble,” James Mackintosh of The Wall Street Journal found a steady increase in its usage by journalists in the late 1990s.[2] There were almost 6,000 mentions of the word “bubble” in 1999, and mentions peaked in 2002 as the bubble deflated.[3]

Speaking as someone who was a finance professor during the tech stock bubble, I can assure you that it was widely debated as it was occurring. We didn’t always use the word “bubble,” but we certainly argued about whether the market was irrationally overpriced.[4] The first edition of Shiller’s Irrational Exuberance appeared in March 2000.

So what’s the situation today? Here are some recent NYT headlines:

• October 14, 2025. Warning: Our Stock Market Is Looking Like a Bubble.
• December 9, 2025. Wall Street Is Shaking Off Fears of an A.I. Bubble. For Now.
• December 23, 2025. Why the A.I. Rally (and the Bubble Talk) Could Continue Next Year

And here are 2026 Davos headlines from various sources:

• The Wall Street Journal, January 21, 2026. Nvidia CEO Says AI Needs More Investment in Defiance of Bubble Fears
• Bloomberg, January 22, 2026. BlackRock’s Fink Not Worried About a Bubble Forming in AI
• Axios, January 22, 2026. In Davos, the AI Bubble Is Always Someone Else's Problem

While I think we haven’t yet reached bubble territory, these headlines are surely consistent with a brewing bubble in the stock market. While I haven’t performed a rigorous time-series analysis, it’s clear that during actual bubbles, market participants are typically asking themselves whether there’s a bubble.

Today, we see ample evidence of bubble beliefs: investors believe the market is overvalued but will rise higher. And in August 2025, 91% of fund managers surveyed by Bank of America said that “U.S. stocks are in a bubble.” Not a good sign.

According to legend, when asked about the cost of his yacht, J.P. Morgan replied that if you have to ask, you can’t afford it. Similarly, Louis Armstrong supposedly said that if you have to ask what jazz is, you’ll never know. Let me propose another rule of thumb: If you have to ask whether you’re in a bubble, then you’re probably in a bubble or at least getting close.

Endnotes

[1] “AI Bubble? Think Again. A Deep Dive,” ARK Funds, November 25, 2025.

[2] “Why Bubbles Can Keep Inflating in Plain Sight,” The Wall Street Journal, October 24, 2025.

[3] In contrast, Greenwood and Stolborg (2025) study individual stocks and find little usage of words like “bubble.”

[4] I myself avoided using “bubble” at the time, as you can see in Lamont (2000).

References

Greenwood, Robin M. and Stolborg, Christian. “Bubble Beliefs.” (2025).

Lamont, Owen A. "Comment on E-capital: The link between the stock market and the labor market in the 1990s." Brookings Papers on Economic Activity 2000, no. 2 (2000): 73-118.