Carl Sagan recommends we see our intellectual adversaries as “kindred spirits in a common quest.” We are all exploring a world that none of us understand. 

As unequivocal bulls for the past year, we have been looking for alternate viewpoints as a counterblast to our optimism. Our search for an articulate bear thesis, however, remains elusive.

This is unsettling. Without the discomfort that comes from contradictory evidence and opinions, we risk becoming complacent. So we ask: Are we in a bubble? Why are bears so bothered? 

Here we examine flows, valuations, earnings, and interest rates. 


Of the $4.6 trillion deployed into mutual fund and ETFs over the past decade, 57 percent went into global bonds and 43 percent went into money markets, according to data compiled by Goldman Sachs. Despite the long-running bull market, cumulative fund flows into global equities were flat. This is starting to change with record weekly equity inflows.

While US equity ETFs picked up nearly $130 billion in 2020, outflows from equity mutual funds amounted to $250 billion. Investors rebalanced away from stocks and toward bonds in record numbers. The behemoth SPDR S&P 500 ETF (SPY) has seen nearly $20 billion in outflows this year.

If capital flows into US stocks are any indication, we are not in a bubble. 

Source: Goldman Sachs

Margin debt is a useful measure of speculative stock market activity, and although it is at all-time highs, we don’t see it as a concern. It is not the absolute level of margin debt but the 12-month rate of change that matters for assessing risks. 

When it is up more than 60 percent o


Photo: Josh Lewis (Dribbble)