We’re in a bubble! Or are we?
19 Oct, 2025
I don’t have to go far at the moment to hear that the sharemarket is apparently due for an almighty jolt/correction/crash. This information might come from a business commentator in the news, a financial advisor with a podcast and an opinion, or the person I got chatting to at a party. Many people have a lot to say and they say it with such confidence, which sows the seeds of doubt with those thinking about or new to investing in the sharemarket.
Economists and business commentators regularly share their hot take on where they think sharemarkets are going, and I’ve now got so used to them saying - all in the same conversation - that markets are going to stay level, go down, or go up. Talk about covering all of your bases. Whilst they are without doubt more well-read than the majority of the population, myself very much included, when it comes to financial matters, with all due respect, they still have no clue as to what the future holds any more than you or I do.
But they sow the seeds of doubt.
What if they are right?
What if a sharemarket crash is imminent?
What if the period we're currently in truly is different?
Are we in an AI bubble?
Surely the sharemarkets can’t go any higher than where they are at right now?
Next time you feel the need to doubt yourself, change your investing patterns, or buy/sell due to fear or panic, come back and read my short post, and dig into the resources I share below.
Please note: As always, I write from the perspective of an exchange-traded fund (ETF) investor, someone who buys a Total World Fund that holds the biggest global companies, covering every single sector. If you are stock picking or buy into an actively managed product, you’ve signed up to a different journey entirely, and yes, some of the headlines just might apply to you.
The sharemarket is at an all-time high.
This chart shows the S&P 500 over the last 40 years. And all the “all-time highs” throughout that time. Source: Yahoo Finance
So, has the sharemarket reached a peak? So what? As share investors, that’s kind of the whole point. The sharemarket doesn’t have a ceiling. There is no “we’ve made it to X point” at which time we all stop investing. The sharemarket goes up because all of the companies that are in the investment fund you own are doing well. We're looking to invest in an ETF that selects the top-performing shares worldwide and aims to increase in value over the long term. We buy regularly, and intend to own it for a very long time.
Those who don’t buy because the sharemarket is at its peak, or try to ‘buy the dip’ (when the market goes down), are missing out because today's peak might be next year's low. When you zoom out 40 years, you can see that the sharemarket is always hitting an all-time high, followed by a drop, followed by a rise. So, even if you buy at today’s high, this day will eventually be considered a low.
MY TIP: We buy our shares on the same day every single month, regardless of what the sharemarkets are doing. Up, down, or hasn’t moved: we buy. Any day is a good day to invest.
The sharemarket is on the verge of a crash.
Probably. You tend not to hear about the climb, but you sure do hear about the drops. Or the anticipation of a drop. Market crashes are normal, and volatility is the stuff that happens in between. Since humans began trading shares, for various reasons, share markets have been crashing. Only to gather themselves and rise again. Don’t fear the crash; it is not game over.
If the sharemarket crashes, the value of your shares will decrease. You still hold the same number of shares; they just happen to be worth a bit less at the moment. Sit tight, stay invested, and they will rise again. Continue to buy while the cheaper price lasts. And then keep on buying even when it rises again.
Think of it this way: If I were planning to do my weekly shop today, and my local supermarket suddenly announced a 30% sale on everything in store, for a limited time only, I’d take full advantage to buy the things I usually buy, on sale. Given I have a set budget for our weekly shop, that same amount of money would buy even more items than it usually would. Win!
It’s the same with a sharemarket crash. The ‘sharemarket’ represents a vast collection of companies covering all sectors and countries, and sometimes their prices go down. Their businesses have not changed, just the price. A crash is the opportunity to invest the same amount of money, but get more bang for your buck.
MY TIP: I don’t take any notice of what the sharemarket is doing. I buy on the same day each month, regardless of whether the share price is up or down. Some months, my money buys more, sometimes less.
This time is different.
Let’s suppose the sharemarket plummeted this morning and my $500,000 investment is now valued at $400,000, a 20% drop. There will be a reason that, although unclear in the moment, will become clearer over time.
It is true that every time the share market crashes, there is a different reason for it. But when you hear people say “this time is different” with emphasis on the word different, they are alluding to their thinking that whatever caused my investment to drop $100,000 is SO different to the last sharemarket drop, that it is probably never going to recover.
But, they are wrong.
While we humans are in many ways slow learners because a lot of the troubles in the world are entirely of our own making, whatever way we manage to screw our economic systems up, given enough time, we sort ourselves out and rise again.
So, yes, the cause of the next sharemarket crash will be different from Covid-19 or a war, but it won’t stop the relentless rise of the sharemarkets over time. And in time, the crash will look like a blip on a graph.
Major market crashes over the past 40 years.
MY TIP: I’ve invested through a few crashes now, with the reasons for the drop varying each time. I remember just some of them: the housing collapse in the U.S., Covid-19 and the tariff uncertainty earlier this year. Three entirely different events. What’s next? No idea, so I’ll continue to invest regardless.
We are in a giant BUBBLE.
I consider myself a relatively logical person, and having had a career in sales before pivoting to parenting and blogging, I know a thing or two about a willing seller and a willing buyer.
When you hear that the sharemarket is ‘over-valued’ and that we are too ‘tech-heavy’ or some such thing, all I can see is that there is a corporation creating and selling a product or service that someone else wants to buy. When the customer no longer wants what the seller is offering, they will stop buying and go elsewhere. Companies will go out of business as a result.
It’s terribly simplistic, I know, but that’s how investing works. Products, services and the corporations that create them come and go, and the sharemarket flows with them. At various points along the way, the world gets hyper-focused on one sector, but give it time, and we’ll get fixated on something else.
If you are an ETF investor who buys a Total World Fund like I do, then I know that at all times I hold whatever is the flavour of the month, year, or decade. When the flavour changes, I’ll own that too, without lifting a finger.
MY TIP: I take little notice of what’s hot and what’s not. I simply buy a fund that holds all the best companies in the world.
Block out the noise and just get on with your life.
Your life is far more interesting than the current state of the sharemarkets. So, go out and live it.
If you are stock picking, you’ve signed up to a different journey entirely. But, if you are investing the way I do - by just buying a Total World Fund, or US 500 Fund, or ETF or an Index Fund that is similar, you can have more confidence that simply by investing, and staying on course, over time, you’ll become wealthy.
By investing in this simple and low-fee way, you can sleep well at night knowing that you will always own the best companies and sectors, all around the world. Within the fund I own, you'll find up-and-coming companies that you and I may not have heard of, yet they are poised to take the world by storm. One day, when they hit the headlines, I will feel comforted by the fact that I already owned them. There is no limit to sharemarket growth, which is why we see high after high. Companies are constantly seeking to give their customers what they want, regardless of who is in government. And if a company, sector, or country falls out of favour, these funds are ‘self-cleansing’, meaning that poor performers drop off the index, to be replaced by the better performing company.
Sharemarkets have enjoyed growth over decades. Plenty of New Zealanders are making plenty of money by investing in the sharemarket. Imagine if you had sat on the sidelines due to fear of a bubble, a crash, or an all-time high, and never got to take part in that?
Through sharemarket ups (bull markets), downs (bear markets), crashes, wars, peace, elections, inflation and the opinion of commentators, just buy, hold, and eventually sell, when you need some income.
And if you're ever fearful, just Google “FTSE All Cap Index” or “S&P 500 Index” and zoom out to the max timeframe. What do you see? A relentless rise in the line on the graph, punctuated by dips and climbs. Sharemarkets are volatile in the short term, which is why we stay invested for the long term.
Happy Saving!
Ruth
Helpful resources:
Follow Jeremy from the Personal Finance Club as he creates simple yet effective graphics that use a picture to tell a story. I follow him on Instagram, and he has also just started a podcast.
JL Collins, The Simple Path to Wealth: Talks at Google - This old clip from 2018 remains one of the resources I share the most, as he will concisely explain how ETF/Index investing works in reality.
Katie and Alan Donegan from Rebel Finance School created this chart showing what countries and companies are in the FTSE Global All Cap fund. It's slightly out of date, BUT still gives an insight into the depth and diversity of an All-World Fund. FTSE Global All Cap Analysis May 2024. You can find the article that accompanies this chart here: You invested everything in airlines? Why share this? To give you confidence that at all times you hold a diverse investment covering countries and sectors, all of which are trying to grow and make you wealthy.
