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Is This the Dotcom Bubble All Over Again?

  • Inflation came in far hotter than expected this week, especially the PPI number, which is the inflation measure the Federal Reserve watches most closely. 
  • PPI came in at 6%, while the Fed’s target remains 2%. 
  • That is a massive gap and very concerning from an inflation standpoint. 
  • Because of that, the Fed is now signaling that interest rate cuts may no longer even be on the table this year. 
  • In fact, there is growing discussion that rates could potentially go higher instead. 
  • Normally, you would expect the stock market to react very negatively to that kind of news. 
  • Higher inflation and higher interest rates are usually bad for stocks and the economy. 
  • But instead, the stock market surged almost 3% in two days. 
  • That raises an important question: are we building a bubble here? 
  • Right now, the parts of the market leading the gains are all AI-related stocks.  
  • The market is basically looking through inflation, oil prices, gasoline prices, war, and everything else.  
  • The belief is that AI is going to create massive productivity and massive profits. 
  • We’ve actually heard this story before. 
  • Back in 1999, people said the exact same things about the internet and dot-com companies. 
  • And in many ways, they were right — the internet did change the world. 
  • But the transition period between the promise and the reality was extremely painful for investors. 
  • That period led to the dot-com crash, one of the worst bear markets in modern history. 
  • The market declined roughly 49% over about two and a half years. 
  • Today, many investors argue this situation is different because companies like Microsoft and other AI leaders are highly profitable and sitting on enormous amounts of cash. 
  • And that is true — these companies are not likely to disappear. 
  • But that does not necessarily mean their stock prices cannot fall dramatically. 
  • A company can remain profitable while its stock still becomes massively overpriced. 
  • The real question is whether current valuations are getting too far ahead of reality. 
  • AI may become one of the greatest productivity tools in history. 
  • But massive productivity gains can also create disruption. 
  • If AI eventually replaces large numbers of jobs, that could hurt consumers and economic demand. 
  • That transition period could create significant economic pain even if AI succeeds long term. 
  • That is why we believe there is still potential for a significant bear market. 
  • We are not alone in that view. 
  • Several well-known economists are also warning about the possibility of a major downturn in the second half of this year. 
  • The good news is that we are not simply sitting around hoping things work out. 
  • This is exactly why we have our Invest and Protect Process. 
  • Our goal is not just to grow your money. 
  • Our goal is to help your money last as long as you do. 
  • To accomplish that, we must protect against catastrophic losses. 
  • Our Invest and Protect Process is designed specifically for environments like this. 
  • We successfully navigated the 2008 financial crisis for clients who followed our advice We successfully guided clients through the 2008 financial crisis, and we believe we can do it again if necessary. 
  • Most importantly, we want this process to give you peace of mind. 
  • We want you focused on enjoying your retirement and your Second Childhood Without Parental Supervision while we mind the store for you. 

 

Transcript:

Ken Moraif 

Hello, everyone, and welcome to our weekly market alert video for today, which is May 15, 2026 And boy, do we have a lot to talk about! This week we had the Fed, we had CPI, we had PPI. Boy, the inflation numbers came in so horrible. Oh my gosh, but what did the market do? Ho hum. So, if you’re wondering where I am as I record this, I’m actually in Brooklyn, New York. And let me see if I can make this work. If you can see the view here out the window, you can see the skyline there of New York City, and I’m actually here in Brooklyn visiting my granddaughter and my daughter, of course, and the reason being that I actually came here for a financial conference, and in the process decided that we would visit our daughter, and so going to spend some quality time with the little baby, but in the meantime, let’s talk about what happened this week, so first of all, as you guys, as I said, CPI, the Consumer Price Index, came in hot, higher than what people wanted. In addition, the PPI number, now this one is the one that the Federal Reserve looks at to decide, you know, what they’re going to do with interest rates and that kind of stuff, and it came in. Are you sitting down at 6% inflation now is at 6% on the PPI, which is the number that the Federal Reserve looks at, and they want to get that number down to 2% Oh my gosh, so that was horrible news, terrible. We have massive inflation, it’s coming on strong, and so what did the.. so the Fed said, “Okay, we are no longer.. we’re even talking now, they’re going to remove the language where they’re saying that there’s a possibility that this year they’re going to lower interest rates, just to remove the thought in anybody’s mind that interest rates are going down, because if anything they may be going up, so what did the stock market think of this? You would think that the stock market would say, “Wow, inflation came in super hot, the Fed could raise interest rates, the economy could tank, and we could have a recession. This is bad news for the consumer. This is horrible stuff. What did the stock market do? It went up almost 3% in two days on this horrible news. 

You wonder, so are we actually building a bubble here? That’s, that’s really an interesting question, because you know, if you look at what’s going on, you would think that the stock market should be way down, and if you look at the stock market itself, the parts of the stock market that are going up right now are all the AI related. So, basically, what’s happening is the stock market is looking right through inflation, looking right through oil prices, looking right through gasoline, looking right through the war, looking right through everything. Nothing bothers the stock market because it’s betting on the AI, and it’s going to be the productivity enhancer. It’s going to create massive profits, and everything’s going to be fantastic. Now, you know what? I’ve been around long enough. I remember these, the words I just said verbatim, verbatim in 1999 okay, the internet dot coms, it’s going to create productivity, it’s going to create massive profits, people are going to be able to sell things on this thing called the internet, and it’s going to be free, there’s going to be no cost in it, it’s just going to take over the world, and all of that, that was true, it did happen, but the interim period between the promise and the delivery, that interim period was pretty rough, because yes, there was the internet, but the adoption and the use of the internet, and to do it properly, and to deal with the other effects of that, well, that was difficult, and that gap created y2k, which was the third worst bear market in history, since, since in the last 100 years, two and a one and a half year, or two and a half year bear market, where the stock market went down 49% 

Bad news. So, how could this happen again? People are saying, “Well, no, that’s not going to happen now. Why? Because it can’t happen. We’re talking about Microsoft here. We’re talking about these companies that are massively profitable, and they’ve got hundreds of billions of dollars in cash. They’re not going to go out of business, so therefore this can’t be the same as the dot coms. Well, here’s where I think people may not be getting that correctly and that is that. Yes, these companies are not going to go out of business. All right, they’re making massive profits, they’ve got hundreds of billions in cash, they’re not going to go out of business. But for a moment, as a thought experiment, what if their stock prices regardless of their profits and everything else. What if their stock prices are 200% higher than where they should be, given what the future holds here? Okay, because think about it, if AI becomes so productive, the next thing you know is we’re going to put like the entire economy out of work, because nobody’s going to have a job, and if nobody has a job, what are they going to buy nothing, and so we’re going to have an economy with this massively productive thing, but nobody with money to buy anything, and if that happens, we could have a significant bear bear market, and even maybe a depression. So, if their stock is massively overpriced, then it could drop, even though they don’t go out of business, so let’s not kid ourselves. AI is not.. I mean, it’s probably going to be the greatest productivity thing ever in the history of mankind. No question in my mind about that. But could it also produce massive unemployment? Could it also produce a big bad bear market as we transition from where we are today to where we would be with this productivity tool, 

I think it’s very possible, and therefore we could have a significant drawdown. Now, you know, last week I talked about how one of the top economists in the world is predicting we’re going to have a big bad bear market here in the second half of this year, and so you know I’m not alone in thinking that there’s a possibility of that, so what it does for me is it gives me actually, believe it or not, this is reverse thinking peace of mind. Why? Because we have our invest and protect process here to help us if that were to happen, if the world collapses because of AI that everybody’s betting on is going to be the big best thing. 

Then we have a process by which we’re going to help protect you from that, and that’s our goal. We want your money to last as long as you do, and to do that, we have to protect you from catastrophic losses, which is what the Invest and Protect is designed to do. So, for me, it gives me peace of mind, because you know we survived the 2008 great financial crisis. We helped clients who followed our advice go through that relatively unscathed. Some I’m very confident that we can do that again, should it happen, but at the same time, I hope it gives you peace of mind that you have it. That’s the most important thing, is that you can go out, enjoy your second childhood without parental supervision, be a SWPer, right, retire, have fun, enjoy. Let us get the gray hair for you, and so that you don’t have to. And I hope this video finds you healthy, wealthy, and wise, and I hope that all is well with you. And I’ll tell you all about how being around my little one year old is gonna be, she’s apparently.. I haven’t seen her yet, apparently she’s very, very cute, and is gonna have me wrapped around her little finger in no time, which, you know, what it’s not all that. So, thanks for watching, and again, hope this found you healthy, wealthy, and wise, and we’ll talk soon. Retirement planners of America, rpoa.com 

 

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