David Rosenberg: Sorry folks, bear markets, bubbles and recessions are not things of the past

financialpost.com:

Every mania and bubble share differences and similarities, but the current wave of artificial-intelligence optimism looks a lot like what we experienced with the internet euphoria in the late 1990s.

It is 100 per cent true that many of the “dot-coms” back then had no earnings and no real business model. But even the bellwethers that did have earnings and real business models got caught up in the World Wide Web mania. Their share prices shot to the moon and then came crashing down to earth, but only after the first major disappointment (God forbid, Cisco Systems Inc. missed its EPS number by a penny, which got the ball rolling) did reality begin to set in.

These megacap tech companies are still around today, but most went through a huge three-year bear market when their stock prices dove 60 per cent or more. You would have been a laughingstock to have predicted this future in the opening months of 2000. And, of course, the internet was transformational in our professional and personal lives, just as generative AI will very likely prove to be. That is not the point.

The real economy does not go through irrational exuberance — investors do

We could have said the same thing about shipbuilders, railways and the Nifty Fifty concept stocks as well, but the financial economy is not the same thing as the real economy. The real economy does not go through irrational exuberance — investors do.

The one thing we do know with certainty is that money is an extremely emotional thing. That is what we are talking about: the extreme emotion of greed and how to make a quick buck in the equity market.

I would agree that valuations were indeed more stretched in the late 1990s. And to reiterate, companies such as Nvidia Corp. are real, not