Sven Henrich is founder and lead market strategist at NorthmanTrader. The views expressed in this commentary are his own.

Last month US markets once again hit a little-known but highly relevant ceiling which has spelled market trouble numerous times in the recent past, most famously during the major market bubble bursts in 2000 and 2007. Investors should recall what happened then, take note and brace themselves for the possible implications.

What is that ceiling? It's when overall stock market capitalization vs. GDP reaches a point historically disconnected from the underlying size of the economy. We are in such a period again, having recently reached a ratio of stock values to GDP of 145%.

The biggest bubbles in most of our lifetimes were the 2000 tech bubble, the 2007 real estate bubble and the monstrosity we are witnessing now: the cheap money bubble. This new bubble has been induced by central banks' artificially low interest rates which are creating the TINA effect, which stands for "there is no alternative." This effect is found in markets where hungry investors are forced to buy high risk assets like stocks because other assets offer worse returns.

Bubbles occur when excess optimism about the future pushes the value of asset prices beyond what the underlying economy actually produces. They are a result of unrealistic future growth and valuation expectations.

All three bubbles have done something unique. They have vastly accelerated asset prices above their historical mean. In 2000 and 2007, these bubbles reached extreme ratio peaks of 146% and 137% in the US, respectively, before they burst, correcting into bear markets.

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