U.S. equities quarterly update
November 10, 2026
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4 min
BILL NYGREN: I would say it rhymes much more with the tech bubble than it does the GFC. I think with the GFC, you had a lot of companies that had direct exposure to the housing market, and most of that exposure had been created with the expectation that housing prices would never decline. We saw it in the banking industry, the building industry, along with other related consumer exposure.
What, to me, is reminiscent of what we went through in the dot-com bubble in '98 and '99, and then the ultimate correction in 2000–2001, is the intense focus on just one industry and similar client behavior in that almost all of our clients want to hear more about our thought process for not investing in specific companies as opposed to why we find the names in our portfolio attractive.
We also found, back in '99–2000, investors thinking it was easy to make money in the market because all you had to do was go along the favorite names. And I think there's a similarity today where many investors think it was easy to identify AI winners several years ago. Those winners are still the expected winners. And if you just climb on board that train, you're likely to do quite well.
We think one of the important differences relative to the dot-com bubble is the dot-come bubble was more about extended P/E multiples and newer business models that did not have much of an earnings history. Today, it's much more about established businesses that are going through an unprecedented cyclical boom. And the question is much more about what percentage of the earnings that they are achieving or enjoying today are likely to be sustainable.
And if you believe that number is very high, a lot of the names that people talk about being in a bubble are actually quite reasonably priced.
Much like in 2000, we couldn't get comfortable with the popular names then because of P/Es. Today, we can't get comfortable because we can't convince ourselves that it's unlikely that earnings revert to levels they were just a couple of years ago.
