r/investing
I Am Not a Perma Bear, But I Cannot Buy This Market
Author stays out of the market due to extreme valuations (CAPE), AI bubble risks akin to dot-com era, sticky inflation limiting rate cuts, and speculative IPO/crypto hype.
- Shiller CAPE ratio indicates S&P 500 valuations are historically expensive and disconnected from earnings reality.
- AI sector exhibits bubble characteristics with massive infrastructure costs outweighing certain near-term profit realization.
- Geopolitical risks could keep inflation stubborn, preventing expected rate cuts and pressuring high-growth equity multiples.
I am not a perma bear. I believe in equities, innovation, and long-term wealth creation. Markets rise more often than they fall, and betting against human progress is usually a mistake.
But sometimes risk becomes too obvious to ignore. For me, that happened in March 2026. I sold all my stocks because I believed the market had moved from expensive to irrational. Since then, the market has gone parabolic, and missing that rally has been painful.
Even so, I cannot buy back in.
The first problem is valuation. The Shiller CAPE ratio compares the market’s price with ten years of inflation-adjusted earnings. Right now, it suggests the S&P 500 is one of the most expensive markets in modern history. Valuations can stay high for a while, but eventually earnings must justify prices. I do not believe they currently do.
The second problem is AI. I believe AI is real and transformative, but real technologies can still create bubbles. The internet was real in 1999, yet investors still paid absurd prices for future profits that often never arrived.
Today, AI is priced as if massive profits are inevitable. But the costs are enormous: chips, energy, data centers, talent, infrastructure, and constant model training. AI may change the world, but that does not mean investors will earn good returns at today’s valuations.
The third problem is inflation. Markets still assume inflation will fall, rates will come down, and liquidity will support asset prices. But if oil prices rise because of the Iran conflict or broader energy disruptions, inflation may stay stubbornly high. That would limit rate cuts and put pressure on equity valuations, especially high-growth and AI stocks.
The fourth problem is speculation and weaker regulation. Crypto is the clearest warning sign. Much of it looks driven by insider incentives, political influence, and hype rather than real economic utility. When protection weakens, ordinary investors often pay the price.
Then comes the IPO wave. SpaceX, OpenAI, and Anthropic are impressive names, but they are also capital-intensive and valued on extremely optimistic assumptions. If they are fast-tracked into major indexes, passive investors and pension funds may be forced to buy them regardless of valuation.
That is often how bubbles end: insiders seek liquidity while the public buys the story.
Maybe I am wrong. Maybe AI profits explode, inflation falls, and the market keeps climbing. But I cannot justify buying at these prices.
Missing the rally hurts. But I would rather miss the final stage of a bubble than buy into a market priced for perfection.
I am not rooting for a crash. I am simply waiting for valuations and expectations to reconnect with reality.
If this is a late-stage bubble, a 35% decline is not impossible.
I'm surprised about how many people are shitting on you, don't worry you are not alone. I'm wondering if we ever see people waiting 10-15 years just to get break-even like it happened a few times in the past, that would calm them down a bit ;)
I was up 12% for the year in March and decided to sell out half my stocks and wait the rest of the year out. I also taken a bit of money out for some home improvements. I decided too much was going on for me to feel happy in this market.
No regrets so far.
Meh, I vastly decreased my SP500 holdings over the last year in favor of ex-US and profitability over growth.
I don't understand the SP500, so I refuse to make it a significant amount of my holdings. But I definitely think if you're young, you should still be in the market.
I am roughly tied with the SP500, though my portfolio dips significantly less 🤷
Define young lol
You reckon holding dollars is a better idea? How‘re they gonna do when the money printing starts anew? OP says inflation is still churning, so let’s sell all the assets that inflate with tangibles? Yeah, OK. Makes sense.
He’s just doubling down so that eventually, one day, when the crash comes, he can say “I told you guys so! I was 10,000 IQ correct!”
The market will crash eventually, but it may “crash” back down to a point that is higher than where we are now, or where we were in March.
using AI to make a post about being upset about AI and finding out timing the market doesn't work despite people knowing for almost decades now.
in March 2026. I sold all my stocks because I believed the market had moved from expensive to irrational. Since then, the market has gone parabolic, and missing that rally has been painful.
I am simply waiting for valuations and expectations to reconnect with reality.
You are literally the walking example of the old saying: The market will stay irrational longer than you can remain solvent.
Oh OP is solvent. Too solvent, in fact. And that solvent pile of cash is losing money daily to inflation.
I don't think he actually wrote it. His post smells strongly of AI.
This time it's different, trust me bro
Everybody here is calling OP a loony market timing noob, but he's basically doing the same thing as Warren Buffet and Berkshire Hathaway. And they've historically beaten the market.
No one should listen to you. Ever.
"I just had one drink, officer"
I think the hardest part of this position is that valuation alone is rarely a useful timing tool. A lot of people were making similar CAPE arguments years ago and missed huge gains while waiting for prices to make sense again.
What stands out to me is that you've gone from cautious to 100% out. If you're still a long-term believer in equities, being entirely in cash is a pretty big bet too. You might end up being right on the correction and still wrong on the timing.