How do we know we are in a bubble? Wait until it Pops

I follow economics and the stock market in the periphery. It does not affect me directly, but it certainly affects me indirectly, so I pay as much attention as I think it deserves, which ebbs and flows with the highs and lows.

The way in which the past few years has made me feel like it is all built on vibes seems to have come to a head. It sounds indeed like it is actually built on vibes, and people who follow it more closely and who have smarter things to say about it admit exactly that. This article is a great overview of how I have been feeling but have not put into words, because I am not one who has any authority when talking about economics.

Extensive quoting (emphasis mine):

In the past, most valuations were tied to tangible assets — machines, property, inventory. The book value of such assets represented around 85% of all S&P 500 valuations as late as 1975. […] ¶ Today, the book value of tangible assets represents less than 10% of S&P 500 valuations. This means that most value is tied to intangible things like code, content, relationships, and, indeed, pure hype. Such assets don’t have a clear book value or replacement value. They may have cost $5 to produce or $5 million, but that tells us very little about their worth. […] ¶ As a result, there is no simple way to determine what anything is worth, and whether the market as a whole has lost touch with objective reality. ¶ More precisely, there is no “objective reality”; the perception of value and actual value are the same thing.