When the Big Wigs say it is a BUBBLE - we should all listen

Ken Griffin and Ray Dalio along with some of the prominent hedge fund managers have been saying loudly that this is a massive bubble and now we are seeing how the AI bubble earnings is not showing up anywhere in the numbers other than the numbers for the AI labs OpenAI, Anthropic and others - there has been no productivity boom.. AI use is wide spread, but the lofty productivity gains are not materializing as much as the hype. And we have always said - when the hype ends - the money spigot will stop - even though the companies are still selling - the valuations of these stocks is at major extremes - which we have highlighted on our x.com account (@trucharts) and here in our blog. margin debt at all time highs; market valuations matching and exceeding the previous bubbles - but yet all the asses on CNBS keep hyping the tech stocks. I have lived through these bubbles and all these exponential moves always end in disaster and the ordinary guy is left holding the bag. This story has played out before - many times and every time - the dialog - 'This time is different" - will be mentioned, hundreds of times.. But you have to see through the hype and learn how to see this in the charts and what is happening actually. I use AI - it is a great tool but I do not need to use it 24 hours a day. I use it for doing research on things I am interested in, make it write code for me and it is a good TOOL - there is ZERO intelligence - even Satya Nadella said it in his interview.  Here are some charts showing the bubble in all its glory - (charts courtesy of  MacroMicro)

The first chart shows the margin balance relative to the money in circulation - compare today versus the 2000 bubble.

This chart shows the US total Market cap divided by the widely measure M2 money supply - above the 1999-2000 bubble..

This chart shows the Buffet indicator - highest ever!!! US market cap divided by GDP

The CEO NVIDIA (who has a bunch of 'YES MEN' ventured into making CPUs for general market - guess what he is making billions in the GPUs - but wanted to make CPUs - for which we already know the TAM (Total addressable market) by looking at INTC and AMD - there is history of the PC/laptop TAM for over 40+ years and yet he wants to make CPUs - low margin business and the stupidity of it is truly mind boggling!!! But when there is too much money - stupidity follows.

This bubble bursting is starting (started) and this will impact the Bay Area housing market and all along the West coast - which is a major bubble in itself - this happened exactly in 1999-2000. No difference - homes selling for 10M over asking!! That is a sign of a bubble..

So learn from this, and learn to read charts and read - make money but also don't get caught up in the hype - like they say on Wall Street - Bulls Make Money, Bears Make Money, Pigs get slaughtered..

Best of luck trading - I tell you charts have been my go to savior and it has truly saved me and also made money. 3 of our personal accounts were up over 25%+YTD - all from chart reading and writing covered calls. Check out our site and videos (I will be putting out some soon) and will be publishing articles here and on the site - we cannot be beat at the feature set we offer and I use it everyday to watch my stocks and charts and use it find opportunities to make money in.

Ignorance does not pay!!

Best of luck trading and investing - use trucharts.com to 

TRADE SMARTER AND INVEST BETTER!

 

This is what we had written in our earlier article below (very narrow leadership):

AI is dominating headlines, earnings calls, and capital spending. You can see it across the entire tech ecosystem—data centers, power, cooling, networking, and semiconductors. Companies are pouring billions into AI infrastructure, and Wall Street is rewarding anything tied to the theme.

But the surface-level excitement hides a very different reality underneath. And if you’re trading this market, you need to understand both sides of the story.

A Narrow Rally: Why Only a Handful of Stocks Are Doing the Heavy Lifting

The AI trade is real, but it’s being carried by an extremely small group of mega-cap names. The top 10 stocks in the S&P 500 now make up about 40% of the entire index—levels we last saw during the dot‑com bubble.

This doesn’t mean a crash is around the corner. Rallies driven by hype can last far longer than anyone expects. But it does mean that index investors are far less diversified than they think.

If your portfolio is built around broad-market ETFs, it’s worth taking a closer look at what you actually own.

Under the Surface, the Market Is Quietly Weakening

While the index hits new highs, many stocks are doing the opposite. Small caps are breaking down. Mid-cap industrials, consumer names, and financials are trending lower. Breadth is deteriorating.

This is classic negative breadth divergence and a warning sign that leadership is becoming fragile. It’s not a reason to panic, but it is a reason to be selective and tighten risk management.

Extreme Valuations Are Showing Up in AI-Adjacent Names

Price-to-sales ratios are flashing red in several popular AI stocks. Revenue is harder to manipulate than earnings, which is why P/S is one of the cleanest valuation signals. See PLTR (P/S of over 60) and ARM (P/S of over 55). But this is what happens during bubble phases. See charts below.

These AI-adjacent names are trading at levels that simply don’t align with any reasonable growth model. That doesn’t mean they fall tomorrow, but it does mean the margin for error is razor thin.

On the other side, some overlooked semiconductor names offer strong cash flow, dividends, and real AI exposure without the hype premium. Sometimes the best opportunities are the ones Wall Street isn’t paying attention to.

One I like is QCOM (there is some downside risk due to their concentration in mobile space) - but buying puts at 10% down would be good protection/hedge. Writing covered calls every week generates decent income.

The Bond Market Is Sending a Warning Signal

The 10-year Treasury yield hovering above 5% is not a small detail. Historically, that level acts as a brake on equity valuations. When risk-free money pays 5%, paying 30x earnings for growth stocks becomes harder to justify.

Right now, equities are ignoring this. But when stocks and bonds diverge this sharply, the bond market usually proves right.

How I’m Trading This Environment

I’m staying engaged, but disciplined. Options and covered calls on existing positions have been effective, specially using weekly contracts that generate income while keeping downside defined.

Technical analysis helps me time entries and exits, and my returns this year are tracking well ahead of the S&P 500.

The key is simple: Know what you own. Know why you own it. And have a plan before volatility hits.

More Tools, More Data, More Edge

I’ll be sharing chart setups, trade ideas, and deeper analysis in this blog on use of our site Trucharts.com, where we have built a full suite of research tools: real-time charts, screeners, earnings analysis, sector heatmaps, and more. Everything you need to make informed decisions without juggling multiple platforms.

Stay sharp. More soon.

Bob Bhatia, Founder - Trucharts.com

This article is for educational purposes only and does not constitute financial or investment advice. Always do your own research or consult a licensed financial advisor before making investment decisions.