Charles Clough, Who Predicted 1990s Crash, Says Today’s Tech Rally Isn’t A Bubble: Report

• Charles Clough said fears of an AI-driven market bubble are misplaced.
• The veteran strategist warned that generational and social rifts pose greater long-term risks.
• He cited potential policy errors by the Federal Reserve as another major threat to market stability.

Veteran strategist Charles Clough, who predicted the late-1990s market meltdown, reportedly said the real threat to financial markets may not be inflated technology valuations or the much-debated “AI bubble,” but a generational breakdown driven by youth unemployment and policy missteps.

In an interview with Bloomberg, Clough said investors are asking “the wrong questions” when comparing today’s technology rally with past bubbles. He stated that, unlike the dot-com boom, the current market is underpinned by earnings power, liquidity, and well-capitalized companies. 

“They think they’re going to repeat the same experience, but the world isn’t like before, and especially the capital markets aren’t like that anymore.”

– Charles Clough, Founder, Clough Capital

AI Bubble Fears Overstated

Clough also pushed back against concerns that the market is entering another tech-driven bubble, saying that valuations alone don’t determine when bull markets end. “You’re always concerned about tech valuations and always will be,” he said. “And it is not unusual for bull markets to be characterized by narrow leadership.” 

He added that robust market liquidity could continue to support share price gains, even with valuations running high.

Fed Policy, Jobs Core Risks

According to Clough, the real danger lies in macroeconomic and structural risks—specifically a policy misstep by the Federal Reserve that significantly slows growth, or a worsening divide between younger and older generations. “If there is a danger, it’s that there’s some sort of social breakdown among generations,” he said. “Over the next decade or so, we have to deal with that.”

Equities traded mixed in midday trade on Tuesday. The SPDR S&P 500 ETF (SPY) dipped 0.05%, while SPDR Dow Jones Industrial Average ETF (DIA) edged 0.8% higher, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) moved 0.57% lower. Despite the downward movement, retail sentiment around QQQ improved to ‘extremely bullish’ from ‘bullish’ territory over the past day, accompanied by ‘high levels of chatter.

Read also: NBIS Stock Rises After $3 Billion Meta AI Infrastructure Deal Despite Shaky Q3 Results

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