The history of the stock market is riddled with excesses. At their peaks the stocks du jour sported valuations unrelated to risk and reward, realistic future earnings and interest rates. That was true for energy stocks more than once, franchisers, mobile home builders, and cell phone providers. The picture was similar at market bottoms. Prices were far below reasonable levels and there were great buying opportunities for both stocks and bonds. Think 2009.

Computer chips are the rage now and it is reminiscent of 1999. Back then you wanted to own Qualcomm as it jumped 2620 percent! Now its names like SanDisk, which is up 3807 percent over the last year and Micron Technology, up 690 percent. Congrats if you own them. I don’t, but it’s always tempting to jump in. I’m reminded of Oscar Wilde’s quote, “I can resist everything except temptation.”

There are many parallels to 1999 but there are differences, too. In 1999 the stock market and consumer sentiment were both at all-time highs. Now stocks reached all-time highs but the University of Michigan’s survey of consumer sentiment hit its lowest level ever recorded.

Why the disconnect? There are a lot of theories. I believe AI plays a role. The history of Silicon Valley was making products that improved people’s lives. That was true in 1999 when the internet was gaining widespread use. But then came social media companies and we were arguably worse off (you can tell my age). Now it’s AI and most hold the view that it will be good for corporate earnings but bad for society as a whole. We are using ever more energy and the layoffs are just beginning.

As I’ve written before, the stock market reflects future earnings and interest rates. Thanks to AI, the earnings picture is very good. As for interest rates, recent reports on consumer and wholesale prices throw into doubt the one or two rate cuts most were expecting this year. The inflation data are likely to show unwelcome increases through the summer due to rising energy costs. After all, the price of virtually everything in the economy has an energy component.

Bonds have given a little ground as rates rise. We have been through many such swings over the years. They aren’t as attractive as dividend-paying stocks but they’ll continue their interest payments. They still play a role in diversified portfolios.

— David Vomund is an Incline Village-based fee-only money manager. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.