Market Bubbles & My Portfolio Anxiety

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Right. So, David Einhorn. Apparently, he’s a very important person in the world of finance. One of those hedge fund managers who, unlike me, doesn’t spend quite so much time wondering if oat milk is really a good investment. He’s been making rather pointed observations about the market, and frankly, it’s making me re-evaluate my entire life plan. Which, admittedly, was mostly based on hoping for a lucky break and a decent Pinot Grigio selection at the local supermarket.

He’s had some successes, you see. Shorting Lehman Brothers in 2007. Very impressive. Although, one can’t help but wonder if everyone was warning about Lehman Brothers, and he just happened to be the one who got the credit. It’s always the way, isn’t it? Anyway, since then, things haven’t been quite so stellar. A bit like my attempts at sourdough bread – a fleeting moment of triumph followed by a lot of dense, inedible disappointment.

His fund, Greenlight Capital, has averaged a respectable 12.7% return since 1996, which is better than the S&P 500’s 10.2%. But it’s been a bit of a rollercoaster. Good in the bad times (2022 was a surprisingly good year for them), less so when everything’s booming. It’s a bit like me and social gatherings. I thrive in a crisis, but a perfectly pleasant party just leaves me feeling…lost.

And now he’s warning about a bubble. A bubble. Honestly, it’s exhausting. It’s always something. First it was dot-coms, then housing, then crypto… Now it’s AI. It feels like a constant state of impending doom, punctuated by occasional moments of retail therapy. He says the market is the most expensive he’s seen, and I suspect he’s not exaggerating. Units of Cryptocurrency Lost: 12. Hours Spent Watching Charts: 9. Number of Panicked Texts to Friends: 24.

Stocks and the Echoes of 1999

He keeps comparing things to the dot-com bubble, which is terrifying because I vaguely remember the dot-com bubble and mostly remember being confused and wearing a lot of velour. The S&P 500’s price-to-earnings ratio is high, the CAPE ratio is even higher, and the Buffett Indicator is…well, let’s just say it’s not a number you want to see if you’re prone to anxiety. It’s like looking at the calorie count on a chocolate cake. You know you shouldn’t, but you do it anyway.

And then there’s AI. Everyone’s convinced it’s going to solve all our problems and generate infinite wealth, and maybe it will. But Einhorn suspects a lot of these companies are spending vast sums of money on things that won’t actually deliver a return. It’s a bit like my online shopping habits. So much potential, so little actual usefulness.

He also points out that retail investors are getting caught up in the hype. Which, let’s be honest, is not surprising. We’re all just looking for a way to make a quick buck and escape the existential dread. It’s a perfectly rational response to a deeply irrational world.

Should I Sell Everything and Move to a Farm?

Einhorn isn’t necessarily saying we should all run for the hills. He runs a hedge fund, after all, and they’re designed to be different from the market. Most of us can probably just stick to broad-based index funds and hope for the best. Although, the temptation to just bury the money in the garden is strong. Very strong.

He quotes Peter Lynch, who said that more money is lost preparing for corrections than in the corrections themselves. Which is probably true. But it doesn’t make the thought of a market crash any less terrifying. It’s like knowing you should exercise, but preferring to watch Netflix.

He has been buying some interesting stocks, though. Antero Resources, Deckers Outdoor, Global Payments. Not exactly the stuff of wild speculation, but solid companies with decent fundamentals. It’s a reminder that there are still opportunities out there, even in a frothy market. I’ve added Deckers Outdoor to my watchlist. Perhaps a new pair of boots will solve all my problems.

He suggests focusing on value stocks. Finding companies that are undervalued and have potential. It’s a sensible strategy, but it requires discipline and research. Two things I’m notoriously short on. I’ve also considered value stock index funds, but they often include some questionable companies. It’s like a buffet. Lots of good stuff, but also some things you definitely want to avoid.

Einhorn has a good track record of positioning his fund for bear markets, but he’s also had his share of failures. It’s a reminder that investing is never a sure thing. We should be prepared for a pullback, but we shouldn’t let fear paralyze us. It’s a delicate balance. A bit like walking on a tightrope while juggling flaming torches. I’m starting to think a farm might be a good idea after all.

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2026-02-04 14:03