Friday, June 20, 2025
  • Login
Euro Times
No Result
View All Result
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology
Euro Times
No Result
View All Result

The Bursting of a Stock Market Superbubble

by Ron Surz
October 13, 2022
in Finance
Reading Time: 5 mins read
A A
0
Home Finance
Share on FacebookShare on Twitter


  • The 13 years ending 2021 are among the best for stock market returns.
  • This year could be the beginning of the bursting of a superbubble that inflated over the previous 13 years.
  • Baby boomers cannot afford to bet against the bursting of bubbles at this time in their lives.

In January of this year, I wrote Lucky 13. History of 13-Year Investment Returns that shows that the 13 years ending 12/31/21 is one of the best on record, so I postulated that the next 13 years might not be so good. The “Roaring 2010s” might have set the stage for the “Depressing 2020s.”

The inflation of a superbubble

The last 13 years are unique in their persistence of good positive investment returns year after year. There was no risk.

13 years of returns in the market

The only “volatility” was up, leading to many articles about the length and magnitude of the recovery from the 2008 crash.

As of the end of 2021, the recovery was the longest on record. By historic standards, a correction was 7.5 years overdue.

Recession chart

And the magnitude of the rise brought it to superbubble levels, where a superbubble is defined as a market that rises more than 3 standard deviations from trend. Many measures of expensiveness had risen to this level, like P/E ratio and the Buffett Indicator.

Buffett indicator

The deflation of a superbubble

So far 2022 has delivered corrections in both stocks and bonds. It’s interesting to note that recent commentators use the word “volatility” to mean losses because it softens the bad news. We now have downside volatility, something we haven’t seen since 2008.

S&P and bond yields

There are many explanations for the declines, including investor behavior. Crestmont Research documents that investor fear takes hold when inflation is extreme – either high or low.

Price to earnings ratio and inflation

Price/Earnings ratios are a manifestation of investor fear or greed. Investor euphoria leads investors to pay a premium for earnings, while fear makes them frugal.

The question on everyone’s mind is how low will prices go. Many, including Jeremy Grantham, believe the US stock market is bursting a superbubble that according to this article. Some examples of previous modern superbubbles in the financial markets are the 1929 stock market crash, the 1970s, and the 2000 dot-com bubble. These events are extreme in historical nature and can see drops in prices of 50% to 90%.

If the ultimate decline is between 50% and 90%, the stock market has another 34%-88% drop ahead. The worst may be yet to come.

Conclusion

As is the usual case in bear markets, Wall Street advises “buy the dip” and “stay the course.” That will work if Grantham and others are wrong, and this is not the bursting of a superbubble.

But 78 million baby boomers cannot afford to risk their lifetime savings at this time because most are in the “Risk Zone” during which losses can irreparably spoil the rest of their lives. We each get only get one passage through the Risk Zone, and this zone is currently extremely risky. Baby boomers need to move to safety which means Treasury bills and intermediate term TIPS.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



Source link

Tags: BurstingMarketStockSuperbubble
Previous Post

Titan Machinery: I Was Wrong (NASDAQ:TITN)

Next Post

Moderna, Pepsi, Lyft and more

Related Posts

Cotton Falls Lower on Wednesday

Cotton Falls Lower on Wednesday

by Barchart
June 20, 2025
0

Cotton futures have been down 21 to 88 factors throughout most contracts on Wednesday. Crude oil was up 25 cents...

AIC seeks GST exemption on all rural general insurance plans

AIC seeks GST exemption on all rural general insurance plans

by Dheeraj Tiwari
June 20, 2025
0

India's largest rural insurer has known as for the elimination of the products and companies tax (GST) on all rural-focused...

Nihilism is at the Core of the Israel-Iran Conflict — Not Nuclear Weapons

Nihilism is at the Core of the Israel-Iran Conflict — Not Nuclear Weapons

by Curro Jimenez
June 19, 2025
0

Nihilism, understood because the absence of a transcendental function, lies on the coronary heart of the battle that Israel initiated...

Interest rates – live: Bank of England holds rate amid oil and inflation concerns

Interest rates – live: Bank of England holds rate amid oil and inflation concerns

by Karl Matchett
June 20, 2025
0

Enterprise information reside - ThursdayGood morning and welcome to The Impartial’s reside enterprise information protection for Thursday.As regular we’ll convey...

The Iranian History Ted Cruz Doesn’t Know

The Iranian History Ted Cruz Doesn’t Know

by Tho Bishop
June 19, 2025
0

Israel’s navy operations towards the Iranian regime has dropped at the forefront deep simmering tensions inside the trendy American proper...

Japan is obsessed with rice. And prices have gone ballistic

Japan is obsessed with rice. And prices have gone ballistic

by Euro Times
June 19, 2025
0

A little extra than a century in the past, in July 1918, the wives of fishermen in Toyama started to...

Next Post
Moderna, Pepsi, Lyft and more

Moderna, Pepsi, Lyft and more

Episode #449: Jim Rogers – The Adventure Capitalist’s View of Global Markets – Meb Faber Research

Episode #449: Jim Rogers – The Adventure Capitalist’s View of Global Markets - Meb Faber Research

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Biocon Closes Rs 4,500-Crore QIP At 6% Discount To Last Closing

Biocon Closes Rs 4,500-Crore QIP At 6% Discount To Last Closing

June 20, 2025
Trump’s ‘Big Beautiful Bill’: Senate aims for passage by this date; hopes to finalise it ‘even sooner’

Trump’s ‘Big Beautiful Bill’: Senate aims for passage by this date; hopes to finalise it ‘even sooner’

June 20, 2025
Bitcoin Seesaws After Fed Governor Waller Hints at a July Rate Cut

Bitcoin Seesaws After Fed Governor Waller Hints at a July Rate Cut

June 20, 2025
Astronomers capture ultra-detailed image of nearby Sculptor galaxy

Astronomers capture ultra-detailed image of nearby Sculptor galaxy

June 20, 2025
Nippon India MF, BlackRock, Societe Generale, others buy 10% stake in Sai Life for ₹1,505 cr

Nippon India MF, BlackRock, Societe Generale, others buy 10% stake in Sai Life for ₹1,505 cr

June 20, 2025
EU analysis shows Israel violating its cooperation rules

EU analysis shows Israel violating its cooperation rules

June 20, 2025
Euro Times

Get the latest news and follow the coverage of Business & Financial News, Stock Market Updates, Analysis, and more from the trusted sources.

CATEGORIES

  • Business
  • Cryptocurrency
  • Finance
  • Health
  • Investing
  • Markets
  • Politics
  • Stock Market
  • Technology
  • Uncategorized
  • World

LATEST UPDATES

Biocon Closes Rs 4,500-Crore QIP At 6% Discount To Last Closing

Trump’s ‘Big Beautiful Bill’: Senate aims for passage by this date; hopes to finalise it ‘even sooner’

  • Disclaimer
  • Privacy Policy
  • DMCA
  • Cookie Privacy Policy
  • Terms and Conditions
  • Contact us

Copyright © 2022 - Euro Times.
Euro Times is not responsible for the content of external sites.

No Result
View All Result
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology

Copyright © 2022 - Euro Times.
Euro Times is not responsible for the content of external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In