A Look at the Big Rise in Tech Stocks
In the past few years, tech stocks around the world have moved up very fast. A big company like Nvidia has even become the largest company in the world with a market cap of around five trillion dollars. This number is almost equal to the total market cap of many Indian stocks combined. Because of this sharp rise, many people feel that the AI boom has turned into a huge bubble. They think prices have gone far ahead of reality.
How Past Bubbles Help Us Understand Today
To understand this better, one comparison uses the Nasdaq 100 index, which includes many tech stocks.
When we look at its rise on a chart, and compare it with big bubbles from history, the picture becomes interesting. It has been compared with the Great Depression rise, the gold boom of the 1970s, the Japanese asset boom, the dot-com bubble, the US housing bubble of 2008, and the China stock bubble of 2005–2008. In four out of these six cases, the past bubbles grew far more than the current rise we are seeing now. This means the present rally may look big, but history shows even bigger bubbles have happened before.
Why Predicting the Peak Is So Hard
Because of these mixed signals, it is very hard to say whether the Nasdaq 100 is already at its peak or still has room to grow. It may fall from here, or it may grow many times from this level before correcting. No one can predict this with confidence. The same thing applies to many stocks in our own market as well. Some stocks are running behind the index, some are running far ahead, and some have moved so much that valuations do not make sense anymore.
Why You Must Have an Exit Plan
In times like these, the biggest risk is following valuation alone. It has stopped giving clear signals in many cases. So, the important thing is to define your exit rule much before the market turns. You must decide whether you will exit based on price behavior, changes in value, or weakness in other stocks. Sitting without a plan can become dangerous and can even waste many years. You do not want ten years to go in waiting and another ten years in recovery.
Protecting Your Gains the Right Way
The goal should be simple: enjoy the gains of the rally, but do not give all of them back later. It is okay to give up a small part of the profit, but not a big part. Build a plan that allows you to grow when the market rises and protects you when things go down. This balanced approach can help you stay safe and still make steady progress.
