Are we witnessing a bubble in the US stock market, or for that matter, in markets across the globe? It’s hard not to feel a bit dizzy watching the Dow Jones Industrial Average consistently break its previous records. But it’s not just the Dow stealing the spotlight. Over in Singapore, the Straits Times Index has reached its highest level in 18 years. It’s closing in on its own all-time record of 3,906 points, sitting just a few percentage points shy of that milestone, largely boosted by stellar performances from the nation’s leading banks.
Meanwhile, the story isn’t much different elsewhere. The UK’s FTSE 100, India’s Nifty 50, the Nasdaq in the United States, and Malaysia’s Kuala Lumpur Composite Index have all shown striking growth. This begs the question: are stock markets, both in Singapore and internationally, becoming overly exuberant?
The idea of investment bubbles is nothing new. You can trace them back to events like Tulipomania in the Netherlands way back in 1623. During that frenzy, the price of a single tulip bulb soared to seven times the average annual salary. Astonishingly, back then, tulip growers were even trading blooms that hadn’t yet sprouted from the earth.
