The high -level analyst indicates that the US bull market goes back to the 1980s

The apparently unstoppable increase in the market – driven largely by a feverish enthusiasm for artificial intelligence, some mega -space technological actions and high prices at prices (P / E) – has triggered an animated debate on the question of whether investors are now perched on the edge of another historic bubble.

The relentless march of the S&P 500 led to some of the prices of the most expensive actions ever recorded. As recently as it was, FortuneShawn Tully reported that the index has reached a record closure at 6,501, sending its P / E dragged ratio (using the real benefits of PCGRs, not on wall projections) at 30x. Tully noted that this territory was only seen during rare moments in market history, including technological frenzy from 1999 to 2002, and briefly during recent crises when income collapsed. For the context, investors obtained $ 5 in profits for each $ 100 invested as recently as 2022; Today, they only get $ 3. What is striking is that the profits themselves have barely followed inflation, which means that the epic rise in equity prices has come almost entirely increased multiple, rather than the growth in business profits.

Kelly offered her own calculation in a note as an analyst on Monday: “verification of foundations of a ruming bullish market”. Until the beginning of this epic rally for several decades, the value of all American actions had an average of 72% of GDP between the third quarter of 1955 and the third quarter of 1985. What has happened since was remarkable, Kelly wrote, and “most of the market gains do not come from economic growth but rather on the one hand of profit from benefit and CEO and multiple pdg and multiple pdg and higher.” Kelly adds that “scaffolding supporting this rugging bull market” is “increasingly high” – and perhaps unbearable.

Kelly’s thesis corresponds to the warnings of several commentators on a “financialization” of the American economy since the age of Ronald Reagan in the 1980s. Financial time the columnist Rana Foroohar, then Timewrote a book on the subject entitled “Makers and Takers” and addressed evidence all over Zeitgeist that financial performance had detached from the fundamentals. “The Big Short”, Adam McKay’s adaptation of Michael Lewis classic non-fiction was a key evidence. These dynamics were captured in a memorable way on cinema in the 1980s, in the classic of Oliver Stone “Wall Street”, which included the memorable line: “Cupidity is good”.

Hype ai: bubble or breakthrough?

Much of this evaluation mania focuses on AI and technology. The recent launch of GPT-5, welcomed as a potential revolution, failed to meet the wildest expectations, fueling the nervousness of the technological sector and a sale of 1 dollars billion in the S&P 500 during the summer. The veteran critic of the AI ​​Gary Marcus underlines the 95% failure rate of generative projects of the AI ​​generator in the industry and a market psychology recalling the previous manias – where “intelligent people are overexcited about a core of truth” and were disconnected from reality. The chief economist of Apollo Global Management, Torsten Slok and others, argued that the leaders of the S&P 500 today, in particular the Giants focused on AI, are even more overvalued compared to their fundamental principles than their Dotcom counterparts of the 1990s.

Investments in the data center has soaked – so much so that their contribution to the growth of GDP at the beginning of 2025 corresponded to that of all consumption expenses, which raises fears that companies are excessive to a trend that cannot make short -term profits. AI unicorn evaluations increased to $ 2.7 billions of dollars, but with limited income and profits to industry, which increases if the boom is durable.

The president of the federal reserve, Jerome Powell, recently told journalists that the Central Bank saw “unusual quantities of economic activity” linked to the construction of an IA infrastructure in the form of data centers. Of course, multiple are the most disproportionate in the technology sector, in particular AI actions at the origin of the highly concentrated S&P 500, as the most precious society in the world, Nvidia.

Weaken economic foundations

In a worrying way, these record summits have entered into a context of lukewarm economic growth and signs of labor market problems. The July job report has shown only 73,000 new hires, while the last three months have seen only 106,000 new net jobs – a fraction of last year’s pace. GDP growth languid at an annualized rate of 1.75% for the first half of 2025, down sharply at the end of 2024 and well below the levels necessary to tame the swollen federal debt. Such slow growth still undermines the case of current actions assessments, which have been motivated almost exclusively by the increase in multiple, and not the improvement in the performance of the company.

For ordinary investors, this means a very expensive capture: equity prices are high because they have submitted the same dollar in companies at the levels observed only in the wildest days of Dotcom or pandemic hikes. While the Haussier market floats more and more above the underlying economic growth, experienced strategists recommend preparing portfolios for turbulence by diversifying beyond American mega-spaces, by increasing exposure to international actions, fixed income securities and alternatives.

Kelly is optimistic about what can happen, due to what the Haussier market has worked longer than anyone who could not expect, so the prognosis is difficult at this point, while advising diversification as a solid strategy. However, the data is remarkable. Between 3q55 and 3q85, according to him, the S & P500 provided a total yield of 8.8% each year, on average, including dividends. “During the 40 years since, he returned an amazing 11.6% per year.”

For this story, Fortune Used a generative AI to help an initial project. An editor checked the accuracy of the information before the publication.

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