Financial markets rarely move in straight lines, but the past six years have been turbulent enough to make even seasoned investors question their intuition. We have lived through political upheaval, a global health crisis, dramatic swings in inflation, the sharpest interest rate increases in a generation, and now another surge in policy uncertainty. Yet in the middle of all this commotion, markets have continued to advance and high-quality businesses have delivered returns that defy the popular narrative of doom.

Consider what the last six years have delivered. Trump 1.0 arrived with tariff wars, immigration battles, and a reshaping of American foreign policy. Covid followed and shut the world down in a way no living investor had previously experienced. Global supply chains seized. Entire industries were forced into hibernation. Central banks slashed rates to zero and governments unleashed fiscal stimulus without precedent outside wartime.

Then inflation surged. It first crept higher, then ran. For a period it appeared untamable. Analysts argued about whether it was caused by supply constraints or demand excess or fiscal overshoot. The debate did not matter much to investors facing rising bond yields and shrinking valuation multiples. Central banks responded with the steepest rate hiking cycle in modern history. Markets were forced to relearn the meaning of risk-free rates, discount factors, and the cost of capital.

Just when the world expected a return to normality, Trump 2.0 arrived, raising questions about tariffs, trade realignment, and the geopolitical order. Through it all, investors confronted headlines predicting recession, stagflation, currency crisis, portfolio destruction, or some combination of the above.

Despite this, something quietly remarkable happened. If you had invested $100,000 in the TAMIM All Cap Fund in January 2019, that investment would have grown to $313,965 by the end of September 2025. That represents an annualised return of 18.47 percent net of fees. I mention this not as a boast, but as a simple observation about the power of disciplined investing over noise.

If the world has felt chaotic, markets have often felt contradictory. Many investors today ask the same question: are we in a bubble?

Why the Bubble Question Never Goes Away

The language of bubbles is seductive because it frames the world in simple terms. If asset prices rise too quickly, we call it a bubble. If prices fall too slowly, we call it denial. If prices recover too quickly, we say it is speculation. If prices fall sharply, we point to greed and fear.

But the reality of bubbles is more complicated. Markets rarely move into bubble territory because investors completely lose their minds. They move there because new ideas arrive before the world has built the frameworks to evaluate them properly. New technologies lack historical anchors. New business models lack reliable valuation markers. New narratives lack precedent and therefore can inflate rapidly.

The current environment contains elements that understandably attract bubble talk. Artificial intelligence is expanding at a pace that challenges the imagination. Data centre construction is scaling faster than many cities can supply energy. Capital is pouring into subsectors of semiconductors, electrical equipment, software, robotics, and digital infrastructure. Venture capital rounds are being raised by companies with no disclosed product. Some start-ups are valued not on revenue but on aspiration. Meanwhile, large companies are committing hundreds of billions of dollars to AI infrastructure and in some cases taking on long-dated debt to do it.

On the surface, this looks like classic bubble formation. And yet, some of the strongest and most cash-generative businesses in the world are allocating that capital. These are companies with real customers, real earnings, and deep competitive advantages. They are not the speculative dot-com outfits of 1999. They are firms with established franchises expanding into new technological territory.

The argument for a bubble often rests on valuation. But valuation cannot be the sole prism. When a technology changes the way economies function, investment flows will surge and traditional ratios may temporarily lose relevance. The correct question is not whether we are in a bubble but whether the behaviours we observe resemble the conditions that create bubbles.

How Bubbles Actually Form

Contrary to popular belief, bubbles do not form simply because prices rise. They form when enthusiasm becomes unmoored from analysis. They form when investors stop asking what could go wrong. They form when narratives overpower numbers. They form when the dream becomes more compelling than the discipline required to achieve it.

Bubbles share several characteristics.

First, they rely on newness. Human imagination expands most quickly when the future contains no historical boundaries. When something has never been done before, people can project anything onto it.

Second, they rely on confidence that feels widespread and justified. Investors start to believe the new technology will inevitably reshape the world. They stop worrying about cost, competition, or execution. They treat the destination as certain even though the path remains unknown.

Third, they rely on capital flows that accelerate far faster than fundamentals. Money moves in waves. The deeper the pool of liquidity, the faster those waves can push asset prices away from intrinsic value.

Fourth, bubbles rely on FOMO. Investors fear missing out on the next big thing. They fear being left behind by competitors, colleagues, or peers. This fear often overrides rational assessment of risk.

Finally, bubbles involve the blurring of risk boundaries. Companies start using debt to finance uncertain outcomes. Investors start accepting terms they would never accept in calmer times. Borrowing increases. Leverage becomes embedded. And when the cycle turns, the results are often painful.

Are we seeing some of these elements today? Absolutely. Are we seeing all of them? Only in pockets. And that distinction matters.

Why This Time Feels Different, Yet Familiar

Investors often fall into two camps when comparing the present with past bubbles. One camp insists that everything is repeating. The other insists everything is different.

The truth is that both views contain flaws. Markets rarely repeat perfectly. History does not produce carbon copies. But history does rhyme, because investors remain human and human behaviour remains consistent.

Today feels familiar because technological progress is accelerating and because capital is chasing that progress aggressively. But today also feels different because many of the largest participants are well-established businesses with deep reserves and proven operating models.

Many AI-related firms do not resemble speculative start-ups in 1999. They resemble profitable giants using internal cash flows to build the next wave of computing. Their valuations may be high, but their underlying business models are not imaginary.

At the same time, the scale of the investment cycle is unlike anything seen before. Estimates suggest trillions will be spent on AI infrastructure, data centres, specialised chips, cooling systems, software optimisation tools, and the electrical capacity required to power it all. Some of this investment will create extraordinary productivity gains. Some will be misguided. And some will be written off as the cost of discovery.

That does not necessarily make it a bubble. It makes it a transformation.

Six Years of Lessons About Market Behaviour

The past six years have been a masterclass in market psychology.

When Covid struck, fear took over. Markets fell sharply. Yet within months, markets recovered and then surged to record levels. Why? Because investors underestimated both business resilience and fiscal stimulus.

When inflation rose, fear returned. Markets priced in recession. Central banks raised rates. Yet corporate earnings remained surprisingly robust, particularly among businesses with pricing power.

When interest rates peaked, some investors retreated to cash. Yet quality companies continued to innovate, adjust cost bases, and increase market share.

These six years remind us that markets are capable of absorbing extraordinary shocks. They also remind us that investing based on macro predictions is usually a losing game. The environment changed dramatically, but long-term discipline still won.

This is why an investment in the All Cap Fund grew from $100,000 to $313,965 over the period, despite everything the world threw at it. Not because we anticipated pandemics or inflation cycles or policy shifts, but because our process emphasised cash flow, balance sheet resilience, valuation discipline, and management quality. Those principles worked in 2019. They worked in 2021. They worked in 2023. They remain valid in 2025.

The temptation is to believe that a period of strong returns occurs despite volatility. In truth, strong returns often occur because volatility shakes out weak holders and creates opportunities for disciplined investors.

The Real Danger for Investors Today

The greatest risk today is not whether we are in a bubble. The greatest risk is behavioural. Investors who try to time bubbles almost always fail. Investors who exit too early often miss extraordinary compounding. Investors who enter too late often chase returns that have already occurred.

The real danger is allowing extremes of emotion to drive investment decisions. Fear and FOMO have the same destructive power, just from opposite directions.

The correct stance is neither to dismiss bubble risk nor to fear it. The correct stance is to recognise that high-quality companies with strong balance sheets and enduring competitive advantages tend to survive cycles, adapt, and compound returns. This has been true in every technological revolution from railroads to industrial machinery to computing to the internet.

AI may create distortions. It may create overbuilding. It may produce losses for aggressive investors. But it will also create winners whose cash flows compound at a rate that justifies investment today.

The challenge is to separate genuine value from speculative excitement. This is precisely what disciplined, bottom-up investing aims to do.

Why Disciplined Investing Still Works

Disciplined investing does not require predicting the next bubble. It requires staying anchored to principles that survive bubbles. These principles include:

• Buying businesses with defensible economics
• Favouring companies with aligned and competent management
• Prioritising cash flow over hype
• Understanding the balance sheet before the story
• Maintaining valuation discipline even when markets lose theirs
• Being patient enough to allow compound returns to work
• Being selective enough to avoid the most speculative edges of innovation

We do not ignore big picture trends, but we do not allow them to dominate our process. If the past six years have shown anything, it is that investors benefit more from consistency than clairvoyance.

The Path Forward for Investors

The next few years will continue to deliver volatility. They will also deliver opportunity. AI will reshape industries. Energy systems will be rebuilt. Infrastructure will modernise. Markets will swing between overexuberance and fear.

Through it all, investors will need to be patient, thoughtful, and selective.

The goal is not to avoid all risk. It is to take the right risks with adequate margins of safety. The goal is not to anticipate every correction. It is to avoid permanent capital loss. The goal is not to follow every narrative. It is to stick to a process that has proven itself through multiple cycles.

Tamim Takeaway

Bubble talk will always capture headlines, but bubbles do not define markets. Behaviour does. Over the past six years, the world has tested investors in every possible way. Those who stayed disciplined were rewarded. Those who relied on prediction were whipsawed.

The path forward is not about guessing whether we are in a bubble. It is about owning high-quality businesses, maintaining valuation discipline, and allowing compounding to do what compounding does best.

The question is not whether the world is stable. It is whether your investment principles are.