The real crash has been happening in fiat currency, not the market

By Arin Ruttenberg* 

There’s been no shortage of talk lately about whether markets — especially those linked to AI and technology — are in a bubble. It’s easy to understand why people feel uneasy after such strong returns, but context matters.

Calling a market a “bubble” is a little like saying a car will eventually run out of petrol. Of course it will. But what matters is how far it can still go before it does — and that’s what investors often miss.

For nearly three years now, we’ve been hearing predictions that the market would crash “any moment.” Yet here we are. History shows us that these warnings sound clever but seldom help investors achieve better results and as the saying goes “Bears sound smart, but bulls make money” and “bad news sells.”

The power of long-term thinking

Over time, bull markets have lasted far longer and delivered far higher returns than any bear market in history. 

The real question investors need to ask themselves is:

“Am I playing to win, or playing not to lose?”

Avoiding volatility might feel safe, but it often means missing the very cycles that build wealth. Long-term success in investing has always come from owning good assets and staying invested, not from trying to sidestep every correction.

Even the most powerful financial minds can’t predict when markets will turn. In December 1996, then Federal Reserve Chair Alan Greenspan — the single most influential voice in global finance at the time — warned investors about “irrational exuberance.”
Yet over the next three years, the S&P 500 doubled in value before any major correction occurred.

If the world’s top central banker couldn’t time the market, what chance does anyone else have? The lesson is timeless: focus on time in the market, not timing the market.

If we look back 100 years, the trend is clear:

• The stock market’s long-term direction has always been up.

• The value of cash has consistently gone down.

Crash Timeline: Growth of $1 and the U.S. Stock Market’s Real Peak Values: shows that over this period of almost 150 years, $1 (in 1870 U.S. dollars) invested in a hypothetical U.S. stock market index in 1871 would have grown to $18,500 by the end of June 2020.

Holding too much cash is like watching your purchasing power quietly erode. Inflation, rate cuts, and central bank policies all work against savers over time, we have seen this accelerate post covid and that’s why investing in productive assets — businesses, infrastructure, innovation, and hard assets — remains the surest way to grow wealth and maintain purchasing power.

A gold lens

It is also worth noting that when we look at markets through a different lens — say, measuring it in gold instead of U.S. dollars — it’s not nearly as overvalued as headlines might suggest. 

The real “crash” has been in the currency itself, not in the underlying assets.

Conclusion:

No one can predict exactly when markets will correct or how long rallies will last — not even the most powerful central bankers. The best approach is to stay consistent:

• Own good assets.

• Hold cash for emergencies and to protect against Job loss, emergencies and market falls, corrections, bear markets and crashes so that you do not take from productive assets during those periods – we will see them happen.

• Hold them through cycles.

• Let time and compounding do the heavy lifting.

In short, the goal isn’t to avoid the storm; it’s to build a ship strong enough to sail through it.

*Arin Ruttenberg is the head of Brenthurst Wealth Sandton. arin@brenthurstwealth.co.za