This Market Looks Like It Was Built on a House of Cards
My second business stint in Miami, when I was part of Corporate America, began in January 2003. It was evident then the local housing market was getting a bit frothy but was not in a bubble yet. That was more evident by 2005 and 2006. By early 2007, it cost 35% to 50% to rent the same place as to own it. But there were still some true believers then that the housing market could go higher, mostly real estate agents and house flippers. It was evident to many, however, that the party was coming to an end.
The pain across Florida was immense during the housing bust as the state was an epicenter for housing foreclosures. The one good thing that came from that debacle is I thought the event would ingrain the pain for generations and keep people from making the same mistake.
I was wrong on this count. What is happening across South Florida puts the previous housing boom 20 years ago to shame. Massive construction cranes dot the skyline from Coconut Grove to Edgewater. No longer content to build 30 to 50 story skyscrapers, now 70- to 100-story edifices are being constructed. Downtown Miami and Brickell look like one big construction site.
Some massive billion-dollar condo complexes are branded for car companies, a sure sign of a top in my opinion. The developer of the 817-foot Aston Martin building in Miami is already being sued by the housing association for shoddy construction among other items. It opened just two years ago. The inevitable bust is already on the horizon with home sellers recently outnumbering home buyers by 160% in Miami. The highest ratio of any city in the U.S.
I see the same signs of an obvious bubble in the stock market that feels like 1999 all over again. The AI Revolution is the first major technology paradigm shift since the birth of the internet back in the late 1990s. With some major divergences. Back in 1999, equities were hitting all-time highs at a time when consumer sentiment was doing the same. In 2026, equities are once again hitting record highs, but this time around consumer sentiment is at the lowest level since this metric started to be tracked monthly in 1952.
There are good reasons consumers are in a deep funk. And nearly 70% of economic activity in the U.S. is driven by consumers. Job growth from 1993 to 1999 ran to nearly three million new positions annually. The year 2025 saw only 181,000 jobs being created. Now 2026 has seen an acceleration of layoffs due to AI, including at Meta Platforms ($META), Oracle ($ORCL), Block ($XYZ) and Intuit ($INTU) in recent months. Housing affordability is near historical lows, and inflation is moving higher again as gasoline is north of four bucks a gallon for the first time since 2022. It will go higher if the Strait of Hormuz remains effectively closed through June.
Meanwhile, stocks continue to rally. Breadth is narrow and primarily driven by semiconductors and other AI related stocks. Market concentration is at levels not seen since the end of the Internet Boom.
The Philadelphia Semiconductor Index ($SOX) is up over 80% year to date with Intel ($INTC) doubling in April and Micron Technology ($MU) up 85% in May and over 900% over the past year. This is the same parabolic move investors saw from networking and dot-com stocks just before the Internet Bust or gold and silver prices up until the conflict in the Middle East began. Neither period ended well for investors.
And while technology stocks are in full 1999 mode, prudent investors should recall the immense hangovers when these manias have ended in the past and manage their portfolios accordingly.
At the time of publication, Jensen had no position in any security mentioned.
