Smead's warnings come as investors continue to invest heavily in the so-called Magnificent Seven stocks and drive the S&P 500 to record highs. He cautioned that the belief that "this time is different" often precedes a major market correction. He also drew parallels between the current market situation and the overconfidence preceding the dot-com bubble burst, warning that even if the market isn't as overpriced as it was then, a significant fallout could still occur.
Key takeaways:
- Investing in the market's biggest stocks could be a big mistake, according to investing veteran Bill Smead.
- Smead draws comparisons between the current AI mania and the dot-com bubble of the 2000s, suggesting a similar downfall could occur.
- He warns that the most popular stocks on the market could plunge as much as 70% in value over the coming years.
- Smead suggests that the current market situation is similar to previous bubbles, and that investors' belief that 'this time it's different' is a common precursor to a major market correction.