Stocks Hit All-Time Highs—But Where’s the Speculative Froth?

Markets are soaring, but the champagne stays corked.

The Paradox of Peak Prices

While indices notch record highs, the reckless euphoria of past bubbles is suspiciously absent. No meme-stock mania, no SPAC frenzy—just a grinding rally that’s left Wall Street oddly sober.

Crypto’s Shadow Over Traditional Finance

Meanwhile, decentralized assets quietly eat TradFi’s lunch. Bitcoin’s up 150% year-to-date, while hedge funds still charge 2-and-20 for subpar returns. Some things never change—except your portfolio’s pain threshold.

The Punchline?

Maybe the real speculative froth was the friends we made shorting Tesla along the way.

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Even with fresh highs, and the idea of the S&P crossing 7,000 back on the table, the current rush hasn't hit a dangerously speculative level, according to analysis by DataTrek co-founder Nicholas Colas. By using S&P 500 sector correlations to the index as a sign of near-term peaks in investor confidence, Colas accurately called the tops in 2023 and 2024, as well as February 2025. "History suggests that we are heading towards an unhealthy level of investor Optimism but are not there just yet," Colas wrote in a note to clients this week.

Growth stocks also continue to outperform value stocks by a statistically significant amount. But Big Tech's concentration in the S&P 500's growth variant, accounting for nearly half of the index's gains, makes the recent outsized run understandable, Colas wrote.

At the same time, crypto investors are partying like the last winter never happened. Bitcoin (BTC-USD) and ethereum (ETH-USD) are at or near all-time highs. And a parade of altcoins are rallying alongside them, with Washington cheerleading the industry and Wall Street shedding its reluctance to participate in decentralized finance. (Did somebody say new financial instrument?) A string of blockbuster public debuts has also embodied the market's exuberance. But with a momentous Fed cut on the horizon and a settling of the worst tariff-induced fears, the optimism doesn't seem misplaced.

Still, other measures have signaled that the new highs could flash as warnings, drawing comparisons to historical market tops that, in retrospect, look like bubbles or were driven by circumstances that necessitated a downfall.

Goldman Sachs analysts recently observed that their Speculative Trading Indicator has risen sharply during the past few months. Behind only the 1998-2001 dot-com bubble era and the acute COVID period of 2020-2021, the gauge has hit its highest level on record, although it still remains well below those prior peaks.

With enough capital and pluck, every phase of a market cycle is a buying opportunity. Vigilance calls for investors to discern speculative froth from intrinsic value. But that's often a difficult task. It's even more so as the market feeds on attention and momentum. Bulls can already see the next leg upward. And while asset prices can eventually become unsustainable, confidence is harder to suppress.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.