Shiller CAPE at 2000 Bubble Levels — Households 30% Over-Allocated to Stocks

In this episode of Lead-Lag Live, Seth Rowe of Running Oak presents a compelling case that current market conditions mirror the 1999-2000 tech bubble, warning that the S&P 500 is dangerously overvalued with the Shiller CAPE at bubble-era levels. He argues that a handful of high-growth tech stocks—particularly those in AI—have become excessively concentrated, with the top 10 holdings now 50% more concentrated and trading at 50-60% higher forward P/E multiples than at the peak of the dot-com bubble. Despite this, many investors remain blind to risk, chasing momentum in volatile, unprofitable companies while ignoring proven value factors like low volatility, profitability, and quality. Rowe’s own strategy, which emphasizes disciplined valuation, earnings growth, and downside risk management, has outperformed every benchmark over the past year—yet it’s currently trading at a 20% discount to where it was just months ago, creating a rare opportunity. He stresses that diversification isn’t just a tactical choice but a form of insurance against uncertainty, especially in a world where private markets are more crowded than ever and public markets are more fragile. The episode concludes with a powerful metaphor: today’s market is an 'orange on a toothpick'—a fragile, overvalued core resting on a tiny foundation of liquidity, vulnerable to any shock. Rowe urges investors to consider alternatives that aren’t chasing the same crowded trades.