Mike Santoli breaks down the meme-stock revival, the gleeful hunting of short sellers, the return of SPACs and the lowering of financial guardrails.
🐂 What Does “Anything Goes” Mean in a Bull Market?
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In the later stages, investor sentiment shifts from cautious optimism to unchecked enthusiasm and risk-taking. Companies with weak fundamentals suddenly rally, and speculative assets gain huge popularity.
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It’s often driven by FOMO (Fear of Missing Out), rising retail trader activity, and crowded long trades.([turn0news19])
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Bank of America data shows institutional cash levels hitting a 12-year low (~3.9%)—a historical contrarian sell signal.([turn0news23])
This environment is temptation-rich—but also risk-rich.
🔍 What the Signals Are Saying
✅ Broader Market Breadth Green Light
In May 2025, the S&P 500 saw a historic escape velocity signal—when over 57% of stocks hit 20-day highs simultaneously. Historically, such signals have preceded average annual gains of around 16%, although corrections of up to 10% often follow.([turn0news24])
⚠️ Sentiment & Valuation Warnings
Yet, analysts like Evercore’s Julian Emanuel warn the bull is nearing a speculative peak. Overconfidence driven by AI hype, crypto rallies, and zero-day options is fueling a 7–15% potential correction as valuations stretch.([turn0news17])
🧠 Should You Follow the “Anything Goes” Mood?
Pros:
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Momentum strategies often work well here—small caps, cyclical sectors, AI-focused players are hot.
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Retail buying has surged: nearly $270 billion poured into U.S. equities in early 2025.([turn0news19])
Cons:
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Late-stage bull markets usually generate low returns in year three (~4.8% annually on average) and carry a high risk of sharp corrections.([turn0news27])
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Cast-off risk: weak businesses get valued like winners—and then collapse.
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Extreme risk aversion can hatch from overly crowded trades and sentiment swings.
🧩 Alternate Views from Real Investors
One Reddit debate captured this tension:
“If you’re heavily invested and shares are getting more expensive each day, shouldn’t you accumulate cash instead while waiting for a downturn?”
It echoes Buffett’s maxim: Be greedy when others are fearful; be cautious when others are greedy.([turn0search10])
📋 Balanced Approach: What to Do Now
| Strategy Approach | What It Means |
|---|---|
| Diversify and Rebalance | Take profits from crowded or speculative gains and rebalance into quality holdings and cash reserves. |
| Trim Speculative Positions | If you’re riding meme stocks or AI-only bets, reduce exposure. |
| Stay Informed for Triggers | Watch for breadth breakdowns (e.g. fewer stocks above 20-day highs), sentiment spikes, or macro surprises. |
| Scale-in Cautiously | Small, measured entry into dips—don’t chase heavily overbought names. |
| Define Risk Thresholds | Set trailing stops or sell triggers to protect gains if a correction hits (e.g. 7–10%). |
🧭 Final Takeaway
Yes, we may be in a late bull phase where “anything goes”—but that doesn’t mean you should go with it. While momentum can fuel short-term returns, history shows major bull markets often weaken in their third year and can flip quickly.
A mix of strategy: capturing upside, taking profits, and managing risk is wiser than chasing every speculative surge. Make sure your portfolio is aligned with your risk tolerance—not just market euphoria.
