Irrational exuberance ?

Robert Shiller coined the famous expression “irrational exuberance” to describe periods where financial markets become increasingly disconnected from underlying fundamentals. The explosion of leveraged single-stock ETFs visible in today’s Goldman Sachs chart is another reminder that parts of the market are again entering a phase where speculation, momentum and short-term positioning dominate rational valuation analysis.

Assets invested in leveraged products tied to a handful of AI and semiconductor winners have surged to record levels. The narrative remains powerful: AI, hyperscaler CAPEX and technological transformation continue to support earnings growth and investor optimism. But history also teaches that when leverage concentrates around a narrow group of winners, market fragility progressively increases beneath the surface.

This does not necessarily mean an immediate reversal is ahead. Irrational exuberance can persist for much longer than investors expect, particularly when supported by genuine technological change and strong liquidity conditions. But it does mean that prudence, valuation discipline and risk management become progressively more important.

In the long run, successful investing is not about following excitement. It is about surviving cycles and compounding capital steadily through them.