Weekly Update from RLA Tax and Wealth Advisory

By:  Dennis Tubbergen

Is This Where the Bubble Bursts?

         Let me be clear.

         My crystal ball doesn’t work any better than anyone else’s does.

         But, looking at the recent behavior of stocks, it seems that the recent rally in stocks has seen stocks go too far too fast to be sustainable.

         I am also keenly aware of the age-old stock market axiom that says stock markets can stay irrational longer than an investor can stay solvent, so I’m not suggesting that a stock decline is imminent; I’m only advocating that stock investors remain cautious.

         Here are the numbers that lead me to that conclusion.

         Last Friday, the NASDAQ stock market index finished up 1.5% (Source:  https://wolfstreet.com/2026/04/17/nasdaq-up-by-60-since-liberation-day-selloff-and-by-100-in-3-years-people-are-just-having-fun/).  It was the thirteenth straight day of gains, which is the longest streak since 1992.  The NADAQ advanced 17.7% over those 13 days and has now made new all-time highs.

         Since the selloff on April 8, 2025, just about one year ago, the NASDAQ index has risen 60%!  That’s great if you’re an investor, but when market rallies get ahead of themselves or become extremely overbought, to use a technical term, a correction almost always follows.

         Since May 1, 2023, the NASDAQ index has doubled.  When you compare 100% growth in the index to total growth in the economy (not inflation-adjusted) of 15%, the disconnect is easy to see.

         As I’ve noted in this publication previously, the current NASDAQ market with gains driven by AI reminds me a lot of the NASDAQ market of 25ish years ago that was driven by the dot-com craze.

         In February of 1997, the NASDAQ market index stood at 1,309.  By February of 2000, the NASDAQ index had risen to 4,670, a gain of more than 300%.  By 2002, the NASDAQ market fell to 1172, forfeiting all the index’s gains.

         While the current rise in the NASDAQ index is less than at the time of the dot-com meltdown, the pattern is similar.  And, while the NASDAQ index could go higher, stock investors should be cautious here in my view.

         AI companies have yet to turn a profit.  Even more sobering is the fact that current AI-related company revenues are woefully insufficient to fund infrastructure build-out requirements.  The dot-com meltdown taught us that unprofitable companies cannot have their stocks go up in price perpetually.  Eventually, investors demand a return on investment.

         While we may not have yet reached that tipping point, we’ll get there.

         I fully expect that many, if not all the NASDAQ index’s gains will once again be forfeited.

Home Sellers Cutting Asking Price in Record Numbers

         According to “Redfin News” (Source:  https://www.redfin.com/news/home-price-cuts-2026/), during the month of February, 34.2% of home sellers lowered their asking price.  Since records began in 2012, this sets a record for the largest number of home sellers who’ve cut their prices during the month of February.

         The average ask price reduction during the month of February was 7.3%. 

         The states of Texas and Florida saw the largest number of listed homes with price cuts.  The Texas city of San Antonio saw 58% of homes listed have the ask price cut.  Austin, Texas, was next with 55%, followed by Dallas with 47%.  Then came Tampa at 46% and Fort Lauderdale at 45%.

         I expect this price-cutting trend to not only continue but also to intensify.

Central Bank Digital Currencies

         According to the Bank of International Settlements, more than 90% of world central banks are now researching, developing, or piloting digital currencies.  (Source:  https://www.armstrongeconomics.com/world-news/central-banks/digital-currency-and-the-end-of-financial-privacy/)

         Presently, in the United States, more than 95% of transactions are digital, whether via credit card, debit card, direct transfers, or a mobile payment platform.  That means we’re almost there already.  And that’s troubling in my view.

         A central bank digital currency is not just a digital version of the same fiat currency; it’s different because it is programmable.  That means that currency can be controlled in real time.  Transactions using the digital currency can be approved or denied at the time of purchase.

           That means spending on specific items could be limited or prohibited.  In a digital currency system, if you’ve already exceeded your allowance for beef or chicken or fuel for the month, your digital currency could be programmed to stop working.

         Digital units of currency could also have expiration dates like a coupon does to force consumption.  Lest you think this is only speculation, these capabilities of digital currencies have already been openly discussed in some central bank reports and are currently being utilized in China, where digital payment systems are already combined with government oversight.

         Digital currency also provides a mechanism to impose real-time taxation as transactions can be monitored instantly.  Capital controls can be enforced automatically by restricting transfers, preventing withdrawals, or limiting fund use for only ‘approved’ goods and or services.  

         Some states have already passed laws outlawing the use of central bank digital currencies, including Florida, Indiana, and Alabama.  I, for one, hope this movement expands to many more states.

RLA Radio

The RLA radio program this week features an interview that I conducted with multi-time best-selling author and economist, Harry Dent, where I get Harry’s forecast for the US and world economies based on his research. 

The interview is now available by clicking on the "Podcast" tab at the top of this page, or you can find it on your favorite podcast channel.

Quote

“I know of no more encouraging fact than the unquestioned ability of a man to elevate his life by conscious endeavor.”

                                           -Henry David Thoreau