By Roman Chuyan, CFA, Chief Investment Officer, Model Capital Management LLC Some observers agree that the bubble will burst, but timing is harder to determine. Rising inflation and interest rates are the reasons the end is near, in Model Capital’s view. Our Equity and Short-Term Risk models continue with Sell signals, dictating defensive positioning. Stocks continued to rise this year, taking the market to an even-more-extreme valuation. It’s a bubble; there’s no other way to describe it. What will happen, and when? The first question is much easier to answer than the second. All bubbles inevitably burst – It’s a certainty. The bigger the bubble, the more severe the crash. This bubble in stocks (and in bonds, housing, etc.) will likely burst spectacularly because it’s very big. By several measures, stock market valuation is at its highest in 150 years, as I detailed in my recent commentaries (see here and here). The Fed made it bigger. Many managers don’t dispute the bubble’s fate, but are forced to be in the market by their benchmark or peers (everyone’s doing it), hoping to get out in time.