three signs that the stock markets are in the “biggest bubble in history”


It broke historical levels based on the “cap” ratio (cycle-adjusted price / earnings). This measures the price of stocks against earnings over a 10-year period and smooths out fluctuations in the economy to give a more balanced view of value.

The S&P 500’s Cape score is now 33.4. It has risen steadily this year after falling to 24 in the depths of the market liquidation in April. It peaked at 32.5 in September 1929, just before the Wall Street crash triggered a global depression.

The only time in the past 140 years that the milestone has been higher was during the dotcom boom of 1998-2001.

Jeremy Grantham, GMO investment manager, said the stock market’s long bull run since 2009 had “finally matured into an epic bubble in its own right.”

“I believe this event will be recorded as one of the great bubbles in financial history, along with the South Sea bubble, 1929 and 2000,” he said.

The following chart shows that investor confidence has soared. Rather than being a sign of buying stocks, it should be taken as a warning, according to Absolute Strategy Research. He conducted a survey of investors who watch $ 4 trillion in assets and found that they were the most bullish on stocks since the start of his poll in 2015. Such a “group thinking” where investors cluster around a single vision, meant they were blind to realities, the firm warned.


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