Let’s get one thing straight. You should never, ever seek financial advice from a guy you’ve never met who writes for a political magazine. The SEC is quite clear on this point. So many of you have taken the trouble to pry loose my personal contact information, however, that I feel duty-bound to share, if not my recommendations on what you might buy or sell, then at least my thinking on how you might make those decisions.

To begin with, my long (and uneven) experience confirms the general assumption that price and value do indeed converge: Markets, if sometimes only in the long term, do recalibrate themselves to reality. (As Editor Buckley would have preferred to say, price approaches value asymptotically. One of his few human weaknesses was the almost lascivious pleasure he took in the befuddlement of his interlocutors. Watch some of those early Firing Line episodes.)

The problem for you and me is that we have to live and work and pay bills in the short term, which is why we are all obliged to learn at least the rudiments of bubble detection, with “bubble” defined here as a temporary but sharp divergence between price and value. If your assets are tumbling in value, that is to say, it affords you no comfort whatsoever to discern that they do so in the face of unassailable logic to the contrary.

Take what is probably your most valuable asset, your home. The experts — tax assessors, insurance agents, realtors, and such like — will tell you exactly what it’s worth. They will be wrong, all of them. The only thing they can usefully tell you is what your home might be worth to somebody else. Only you know your home’s real value because only you know if it gives you respite, if it gives you pleasure, if it attracts friends and family, if it holds precious memories. The value of your home, to others, could rise sharply or dive precipitously, and unless you are forced to sell or you become a house-flipper, you care not a whit. Bubble, schmubble. (There is an exception to every rule. On that one day in each year when you are granted an audience with the tax collector to protest your real-estate levy, you should feel free to enumerate the multiple flaws of your home, some so glaring, frankly, as to make it all but uninhabitable.)

Then take what is probably your next most valuable asset, your equity holdings in corporations. Here, bursting bubbles can have real consequences. If your stocks decline in value, your net worth declines concomitantly and can take with it, among other things, support for your current debt, the basis for future borrowing, cash reserves to handle emergencies, capital available to seize nubile opportunity, and, sometimes most cripplingly of all, your job mobility. If you’re young, that equity loss may be no more than a temporary problem. America’s secular, upward trajectory may bail you out. (That trend has held impressively, from early Washington through, oh, late Biden.) If you’re old, though, you might not have time to recover, and you could be looking at disaster: You may not be able to pay for the astonishingly expensive last chapter of your life. You must, therefore, do your best to detect bubbles — and to avoid them.

Take a look at two recent bubbles, one midway in its cycle and the other just beginning to inflate. The first is the artificial-intelligence boom that, for the first time in two years, may be hitting a plateau, at least in terms of stock valuation. It has been led by Nvidia, which, if you’re honest, you will admit that you had never heard of until last year. How rapidly has Nvidia’s stock price increased? It is today one of only three companies in the world valued at more than $3 trillion. Along with Apple and Microsoft, Nvidia now accounts for 20 percent of the total value of the S&P 500. (For perspective, back in 2008, the big three of Exxon, Walmart, and Proctor & Gamble accounted for 10 percent.) Just this calendar year, Nvidia’s stock price has increased 150 percent.

How should you think about Nvidia? If you bought some shares three or more years ago — congratulations! You may now take your place alongside those thousands of Apple and Microsoft millionaires. But if you missed that opportunity, should you jump on the bandwagon now? There’s no question that artificial intelligence represents exciting prospects, nor that Nvidia, at the moment, is the alpha dog in a hungry pack of AI wannabes. But those exciting prospects appear to be reflected already in the current price. Nvidia sells today for 45 times its expected earnings. The average large-company stock has, over the past two decades, sold for 17 times its actual earnings. As the securities analysts would say, Nvidia is priced for perfection.

So, if you’re old, or old at heart, you might ask yourself this question: In what parts of your own experience — business, politics, family life — have all of the participants, year after year, executed their roles perfectly?

Now, as to the bubbles just beginning to inflate, I am tempted to say that your guess is as good as mine, but I am equally tempted to say that your guess is as good as Jerome Powell’s. Bubble detection is, by definition, an inexact science and best left to amateurs. It is the professionals who create bubbles.

My own candidate, chosen from many, would be private credit, which is a benign phrase for an old business practice — the lending of money from one party to another party in the absence of third-party scrutiny. Think of it as a service provided by financial institutions that act like banks without being monitored or examined or regulated like banks. It has been a profitable business since biblical times, but only in recent times has it become a huge business. As of last December, total U.S. private-credit assets amounted to $1.7 trillion.

Just a few data points:

As a close student of human affairs once wrote: “Double, double toil and trouble / Fire burn and caldron bubble.”