Are We Living in a Stock Market Bubble?

After an incredibly turbulent kick-off to 2022, the stock market may still be in for its fair share of choppy waters this year. In this segment of Backstage Pass, recorded on Jan. 21, Fool contributors Jose Najarro, Jason Hall, and Toby Bordelon discuss some recent predictions from famed investor Jeremy Grantham and provide their personal takes on investing during bumpy periods in the stock market. 

Jose Najarro: First I just want to say I'm happy he just calls it a superbubble and not a super-duper bubble. I think that's [laughs] when I would start to get worried.

Jason Hall: What if it was a super-duper-uber bubble.

Najarro: I don't know that. That's just a whole different level of Jason. First, pretty much what Rachel said, right. Invest money that you don't need anytime soon. That helps out a lot with emotions. I think at the end of the day, emotions place such a huge role in this investing world.

Being able to control it can really help out the portfolio in the long term. For me, I want to say I want to be honest, today was probably the first time in a while that I almost, I have a plan of always purchasing on a weekly basis.

Today for a second there, I almost doubted my plan of purchasing and the second passed. I went to go and buy the companies I enjoy because I remember I'm investing in companies that I believe will do well within the next few years.

These are companies that I understand that I believe their products are going to continue to do well. Even though here on the Fool Live, for me, huge in tech I haven't been worth but today for a split second, I almost freaked out, but then things went back to normal. I remember that "Hey, this is money I don't need anytime soon. I'm just going to continue with my plan and my dollar-cost average."

Toby Bordelon: It happens to the best of us Jose. You always have those moments no matter how emotionally stable you think you are, there is going to be a moment in every investor's life when you say uh oh, but congratulations to you for staying the course. 

Najarro: I'm happy it happened today because I feel like it resets my emotions again to some extent because it's been weeks and it's just been building up, building up finally like a little moment happened, but I feel a little reset.

Hall: Like a pressure release right? You move on. 

Najarro: Now to the other question, what would cause the overall market to crash? I feel like whatever happens, we're going to be like, "Oh, I can't believe we didn't see that that was such an obvious thing that would cause the market to crash."

For me, I'm huge in the semiconductor industry. For me, I would think it's something there. Maybe one of the manufacturers of equipment in the semiconductor industry. If there's a huge fire. There's something with production there that holds that market. I do believe that can cause some form of sell-off in the market.

Bordelon: All right. Thank you, Jose. Jason, you were teasing us with some interesting comments.

Hall: I'm coming in hot here guys. I really am.

Bordelon: I'm looking forward to your answer here. I'm sitting tight.

Hall: I'm going to start actually by answering Bill Brown, Bill Brown asked a question over in Slido about Upstart (UPST -1.30%), the stock fell double-digits today. Wedbush, one of the investment banks, one of their analysts lowered his price target. Here's the thing. He lowered his price target from $160 dollars to $110.

Upstart stock was about $105 yesterday when the market closed. He lowered his price target to higher than the price before the stock started trading today when they came out, and he said, and I quote, "We believe Upstart's valuation is appropriate."

I paraphrase that. "We believe a premium valuation is warranted given the company's high growth" etc. What does the stock do? Falls 12%. There's a lot of feels in this market right now, ladies and gentlemen. I want to get that out there first. Now, I say that because the market is always looking for a reason for the market to fall. We always climb a wall of worry.

Whenever there's a bull market, there are always a million reasons why stocks go down. That's why Jeremy Grantham, right?

Bordelon: Yeah, Jeremy Grantham.

Hall: I mean, he's made a career of being a bear, and he is predicted 43 of the past four market crashes. He's always predicting a crash. Because there's always a reason for one.

There is. Fear is sexy, it gets people riled up. It gets people to pay attention. With that said and what we're doing, I think guys are really good exercise.

It's important to pay attention, and to question yourself, and to go through the thoughts about what could possibly happen. Then inevitably you're going to be wrong, right, plans are useless, but planning is invaluable. I can't remember exactly who said that, but that's the thing.