In a column in the Financial Times last week, the market expert said investors around the world are putting more money in a single country than ever before. 

“Awe of ‘American exceptionalism’ in markets has now gone too far,” warned Sharma, who authored the recent book What Went Wrong With Capitalism.

For example, U.S. companies now account for 70% of the leading global stock index, up from 30% in the 1980s, while the U.S. economy’s share of global GDP is just 27%, he noted.

To be sure, U.S. growth has been more robust than elsewhere lately, and American companies are among the most profitable. But Sharma pointed to other metrics that indicate how out of whack markets have become, even after factoring out the AI boom that has sent a handful of U.S. tech stocks to stratospheric levels.

Indexes that weight stocks by price instead of market cap and adjust for the leading tech giants show that the U.S. has outperformed the rest of the world by more than 4-to-1 since 2009, he explained.

And such outperformance isn’t restricted to stocks either. In 2024 alone, $1 trillion in foreign capital has poured into U.S. debt markets, nearly double what the eurozone has attracted. And America controls more than 70% of the global market for private equity and credit.

“In the past, including the roaring 1920s and the dotcom era, a rising U.S. market would lift other markets,” Sharma wrote. “Today, a booming U.S. market is sucking money out of the others.”

A mania in market sentiment can impact the real economy, he warned. For instance, investors abandoning smaller markets can weaken currencies and force central banks to hike rates—slowing those economies and worsening their fundamentals.

“Talk of bubbles in tech or AI, or in investment strategies focused on growth and momentum, obscures the mother of all bubbles in U.S. markets,” Sharma added. “Thoroughly dominating the mind space of global investors, America is over-owned, overvalued, and overhyped to a degree never seen before.”

His admonition echoes what Allianz chief economic advisor Mohamed El-Erian said last month, when he told Bloomberg TV to expect a “huge sucking sound” of foreign capital flooding into the U.S.

The rest of the world may have more trouble coping with a period of faster growth and hotter inflation, adding to America’s relative edge, he predicted.

“This is a period in which U.S. dominance of the global system is going to increase, both for positive reasons and for negative reasons in the short term,” El-Erian said.

Meanwhile, “black swan” investor Mark Spitznagel, founder and chief investment officer of the hedge fund Universa Investments, has been warning about a bubble for a while now.

Last year, he said the “greatest credit bubble in human history” was set to pop, and said again in June that the bubble was about to burst. In September, he said markets had already entered black swan territory.

After massive stock gains in 2023 and this year, Wall Street expects the good times to keep rolling in 2025. Bank of America sees the S&P 500 reaching 6,666 by the end of next year, and CFRA sees it hitting 6,585, with both representing upside of about 8%. And market guru Ed Yardeni has a target of 7,000 by then, indicating a 15% surge.

Correction, Dec. 9, 2024: A previous version of this article misstated Mark Spitznagel’s founder title.