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While bubble definitions abound, most fall into two camps: those that measure overvaluation and those that observe the behaviours and conditions that typically give rise to it.

The most straightforward definition of a bubble is asset prices climbing far above some measure of value, such as earnings, dividends, gross-value-added (GVA) or discounted cash flows. Robert Shiller’s famous CAPE ratio, which compares stock prices to long-term average earnings, and John Hussman’s market-cap-to-GVA, were designed to flag these distortions. Continue…

by Roger Montgomery Posted in Global markets, Insightful Insights, Investing Education, Market commentary.

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Not only are stock market valuations stretched, but on the metrics that are most reliable for predicting future returns, the U.S. market is at an all-time high. We can say that factually and therefore categorically.  It’s not a matter of opinion. 

It’s worth remembering to bring everything back to the data to avoid the influence of emotions. 

The important question then is not whether reducing your exposure and rebalancing portfolios results in a missed opportunity to maximise gains, but whether you’ll regret not doing that, and instead of retiring in two years, being forced to work for another six or seven. Indeed, and upon reflection, there will always be regret; the decision is about which regret is worse. Letting gains evaporate might be worse than missing out on a few more dollars.

This article was first published in The Australian on 05 November 2025. Continue…

by Roger Montgomery Posted in Aura Group, Digital Asset Funds Management, Global markets, In the Press, Market commentary.

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The father of a field of mathematics known as fractal geometry, Benoit Mandelbrot, in his fantastic book, The (Mis)behaviour of Markets, observed that market price movements, unlike the smooth curves assumed in traditional financial models, are jagged and irregular, meaning that large price swings are more frequent than expected, and periods of high volatility can be followed by more high volatility. His work provides a more realistic framework for understanding and modeling risk, noting also that volatility in markets tends to cluster.

In my experience, I’ve observed those volatility clusters often mark turning points in markets. To be clear, not all periods of heightened volatility are turning points, but almost all turning points are accompanied by greater volatility. Continue…

by Roger Montgomery Posted in Economics, Market commentary, Market Valuation.

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National Australia Bank (ASX: NAB) delivered its full-year 2025 (FY25) results on 6 November, posting cash earnings of $7.091 billion – essentially flat on FY24 and a touch below the market’s $7.18 billion consensus.

The share price sold off about two per cent on the day, and we believe the relatively soft trading since is due to investors focusing on two things:

1. Higher-than-expected loan impairment charges (up 14 per cent to A$833 million), driven mainly by missed payments, a handful of individual business banking exposures and some unsecured retail lending stress, and
2. Relatively flat earnings and final dividend 85 cents per share, bringing the full-year dividend per share (DPS) up one cent to 170 cents, fully franked.

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by Roger Montgomery Posted in Companies, Financial Services.

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In U.S. trading overnight, Nvidia achieved a market capitalisation of US$5 trillion, after which Microsoft, Meta Platforms and Google’s parent company Alphabet delivered their September quarter earnings.

The results were impressive, as expected. Microsoft reported Q1 revenue of US$77.67 billion, beating estimates of US$75.33 billion, with earnings per share (EPS) of US$4.13, surpassing the US$3.67 forecast. Continue…

by Roger Montgomery Posted in Market commentary.

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Over the last month, the U.S. stock market has shown signs of shifting priorities. That’s because, surprisingly, the top-performing sectors weren’t the usual suspects. They weren’t the high-flying artificial intelligence (AI), technology, or defence industries, but the more stable and defensive healthcare, utilities, and gold sectors. These sectors, seen as safe havens, suggest that at least some investors are bracing for turbulence.

It certainly raises the question: Are cracks forming in this bull market? Continue…

by Roger Montgomery Posted in Market commentary.

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There are many consequences of gold’s vertical ascent to new all-time highs. One of course, is the queues of first-time buyers forming outside gold bullion stores around the world. A more subtle consequence, however, is the emergence of arguments that justify the rally and inspire those queues.

Throughout history, gold has functioned as both a store of value and a safe haven during times of monetary, political, and economic upheaval. Unlike fiat currencies or the assets of specific corporations, gold’s value isn’t linked to the fortunes of any one nation’s economy. This quality renders it especially attractive during crises such as wars, rising inflation, financial downturns, and global health emergencies. Its reputation for stability, its widespread recognition and universal and historical acceptability, has positioned gold as a go-to hedge against systemic threats and the erosion of currency value. Continue…

by Roger Montgomery Posted in Market commentary.

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As headlines mount, I wonder whether the nascent disorder in U.S. subprime auto loans becomes a bigger fissure into which a stretched stock market could fall. With stock valuations hovering at historically stretched levels, even a hint of a macroeconomic or financial fracture could precipitate a correction. Continue…

by Roger Montgomery Posted in Market commentary.

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Back in October, I examined the emerging trend of interest rate cuts across the Western world, looking at why they were occurring and how different economies were responding. Since then, rate cuts have continued in several countries. In this update, I return to the same six economies (Australia, the U.S., the UK, Europe, Canada, and New Zealand), incorporating more recent inflation expectations and labour-market data to assess what these developments may signal for 2026.
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by David Buckland Posted in Economics, Global markets, Market commentary.

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Let’s state the obvious right at the outset: No one knows for certain if the equity market will crash.

The reality of investing is that we can rarely identify a bubble until after it has burst, which means we can never be sure when we are inside one. However, with that necessary disclaimer in place, I am reasonably confident that investors should prepare for a shift in 2026. Continue…

by Roger Montgomery Posted in Economics, Global markets, Insightful Insights, Market commentary.

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