Letting Air Out Of a Bubble
June 5th, 2026
Hi,
The following serves as the introduction to our June Review, which will address four major issues facing investors today.
Below is the introduction, sent now so that we do not appear “behind the curve” had we waited until June 30.
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AI shares are in a valuation “bubble.” It is not that AI will fail to become a major technological leap. The issue is that today’s largest companies are locked in a contest measuring 8.5 on a financial Richter scale, with the only possible result being value destruction: spending trillions of dollars, layering on leverage, and diluting shareholders through continuous equity issuance. In a race where every top-weighted firm in the S&P 500 invests at a similarly escalating pace, all participants lose economic value over time.
And even for their clients, the commercial outcome is far less transformative than the narrative suggests. AI may advance, but relative advantage does not, and investors are paying premium valuations for benefits that will be evenly distributed and quickly competed away.
Across cycles, your patience will be well rewarded, though we understand how bubbles (Bitcoin was the darling investment a year ago, now 42% lower) cause angst to those not part of it.
This should be especially clear today as leverage rises across the board, private equity defaults hit record highs, and inflation-adjusted compensation growth over the past five-year bull market has been essentially zero.
THE COMPLETE REPORT SENT TO CT CAPITAL RESEARCH CLIENTS
Categories: General
