David Rosenberg on Bubbles, Bonds, and a Generation Running Out of Time
In a conversation that covers everything from AI-driven capital excess to the looming demographics of a dangerously under-rebalanced boomer cohort, David Rosenberg, founder and president of Rosenberg Research, makes the case that the current market environment is not merely expensive. It is historically extreme, structurally fragile, and deeply misunderstood by the very investors most exposed to it.
A Bubble in Behaviour, Not Technology
Rosenberg is careful to draw a distinction that gets lost in the noise. The AI technology is real. The infrastructure is real. What is not real, in his view, is the valuation that investors attach to it. "The bubble was not in the internet technology," he says. "It was in investor behaviour and what they were pricing in."
The parallels to prior cycles are deliberate. Rosenberg walks through the late-nineties tech bubble, the mid-2000s housing bubble, and the 1980s LBO and commercial real estate bubble, and in each case the same pattern holds: the word "bubble" only enters the vocabulary after the fact. "It's always funny that you call it a bubble after it already popped," he observes, "but when we're living through the bubble, it's not a bubble."
Today's iteration is broader than any that precedes it. The AI trade has not stayed contained in technology. It has engulfed every sector of the equity market. "Even Caterpillar," Rosenberg notes, "is an AI stock now, an AI stock that resides in the industrials." The only two sectors with limited correlation to tech — healthcare and consumer staples — are where he sees defensible ground if the cycle turns.
The Most Expensive Market in a Century
The Shiller CAPE ratio has sat above 40 for five consecutive months. Rosenberg places that in context without equivocation: the CAPE multiple is higher than at any prior market peak or bubble peak going back to the early 1900s. For those inclined to draw comfort from the comparison to dot-com valuations, he is blunt. "If that makes you feel good that this is the second most expensive market of all time — knock yourself out."
Critically, the equity risk premium is negative. Real yields on the 10-year Treasury sit around 3%. Real economic growth runs closer to 2%. "Real rates have overtaken real economic growth," Rosenberg says. "This is not like it was three years ago when real growth was three and the real rate was two. That's a tailwind. Right now, the interest rate structure is a big headwind."
The Bond Market Nobody Wants
Household balance sheets in the United States carry 73% in equities and just 7% in bonds. That imbalance, Rosenberg argues, is not a reflection of a considered view on duration. It is a reflection of extrapolation and recency bias. "You gotta go up almost a hundred basis points to not make money in the bond market," he says, pointing to the starting yield as the operative metric.
Meanwhile, the S&P 500 dividend yield sits at roughly 1%. The bond market, for the first time in a quarter century, offers a genuinely competitive income alternative. The irony, as Rosenberg frames it, is that most investors are running in exactly the opposite direction. The assets that look most attractive right now are the ones nobody will talk about at a dinner party.
Boomers and the Portfolio Time Bomb
This is where Rosenberg's concern becomes most pointed. The median boomer is now 70 years old and carries 55% of their financial portfolio in equities, against an age-appropriate target closer to 30%. In the dot-com wreck, the median boomer is 45. There is time to recover. Today there is not. "There's no time," Rosenberg says plainly. "What are they gonna do if in fact we get a bear market?"
The question is not abstract. Over half of what investors own sits in passive index ETFs. "They have no clue how concentrated their portfolio is," he says. The concentration risk is obscured precisely because the vehicle is called diversified. It is not. Ten stocks account for more than 40% of the S&P 500. The 60/40 portfolio, unrebalanced and equity-heavy, now looks more like 75/25, with a 60% weighting that is itself dominated by a handful of megacap names.
Canada as Relative Refuge
On Canadian equities, Rosenberg offers a measured but constructive view. Canada trades at better valuations, carries a positive equity risk premium, and has limited technology exposure. Its concentration risk sits in financials, which have already corrected by more than 10%. "If I had to pick my spots and if I was making money in the US market and you wanted to deploy any profits, I would put part of it in the Canadian market right now." He draws a parallel to the 2003 to 2013 period, when Canada outperforms through the S&P 500's lost decade, driven largely by its hard asset and commodity composition.
The model portfolio at Rosenberg Research reflects these convictions. It carries energy infrastructure, pipelines, rare earths, base metals, gold, global healthcare, aerospace and defense, and a 30% allocation to bonds that is growing. Cash is recently raised to 10%. "We're starting at the margin to de-risk," Rosenberg says.
The Permabear Who Never Left the Market
It is worth addressing the label directly, because Rosenberg does. The ROSY ETF — the Corton Rosenberg Global Macro Fund — launches from a model portfolio that is up nearly 60% over three-plus years, with a 0.4 beta to the S&P 500. "Capital preservation is in my blood," he says, "and I don't swing for the fences." He has never been 100% out of equities. The permabear characterization is, in his view, a misreading of what disciplined risk management actually looks like. "So long as there is still in this business a market for rational thought, I'll be there for you."
5 Key Takeaways for Advisors and Investors
- The bubble is in valuations and behaviour, not the technology itself. The AI trade is real. The prices attached to it are historically extreme. The CAPE at 40-plus is higher than at any prior market peak going back to the early 1900s.
- A negative equity risk premium is a warning signal worth heeding. When real bond yields exceed real economic growth, the case for holding equities at current prices rests entirely on continued multiple expansion. That is a fragile foundation.
- The bond market at a 25-year yield high deserves a fresh look. At a starting yield of 4.5 to 5%, the math on fixed income has changed materially. A portfolio still carrying 7% in bonds, as the average household does, is structurally misaligned with both income needs and risk management.
- Boomer portfolios carry a demographic time bomb. Median age 70, 55% in equities, with no time horizon for recovery. Rebalancing is not a market call — it is a fiduciary responsibility.
- Canada offers relative value in a world short of it. Better valuations, positive equity risk premium, hard asset exposure, and limited AI concentration make Canadian equities a rational destination for capital rotating out of the U.S. trade.
Footnote:
1 “David Rosenberg: Bubbles, Bonds, & Boomers." AdvisorAnalyst, 23 Oct. 2026, advisoranalyst.com/2026/10/23/david-rosenberg-bubbles-bonds-boomers.html.
