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Is it a bubble?

Chart: Are We in a Stock Market Bubble? | Statista

  1. Jesper Jespersen
    September 19, 2021 at 5:15 pm

    Obviously, we are in a (much too) low interest and liquidity overflow bubble.
    Wait and see, when the inflation-hawks convince centralbankers to raise the rate of interest, squeeze liquidity the Bears will take over – recall 2008.
    Good luck – Jesper J.

  2. John Behrens Jensen
    September 19, 2021 at 10:09 pm

    My answer is no! And the Witshire is too broad a market to make predictions about. First of all, we are undergoing a technological change in energy, robotics and manpower and that necessitates an expensive rebuild and it bumps up the GDP greatly. This is a time similar to the post-war 1920’s and 1950’s and although times do not exactly repeat themselves they do rhyme a lot. Also, we need GDP growth and inflation and not stagnation so I don’t see a halt on an infrastructure build-out at low interest rates. This is the best time to build it! If infrastructure can be built at low interest rates because rich equity investors have no other place to go then I see no bubbles in asset backed securities – such as those large infrastructure projects built with low interest gov’t debt. If the gov’t pays $5 bil in infrastructure projects with recurring value and doesn’t give it away to the rich then the financial statements balance. And, it boosts wages and growth. Unlike the NASDAQ the DOW components have primarily low P/E levels – they are earning and growing – I see no bubble there. The nature of demand would have to change a lot before earnings fall and investors ditch the DOW. But, there is a bubble in the NASDAQ and in Bitcoin and that affects capital migration – they mostly have speculative value so who knows where the huge wad of cash will wind up. But, I’ve noticed that just because I’m right it doesn’t always mean the markets will pay attention to me.

    I’m shifting over to around 30% in cash in anticipation of the tax-loss (gain?) season, a seasonal sector rotation and a possible 20% DOW adjustment – we are due for one! But, the TSX in Canada is yet to really grow as is Europe and Asia – they are stunted compared to the DOW – so far the USA has gotten the greatest influx of cash. I also went to 50% in cash 2 years ago for the same reason – then I figured the rotation was into food production (land) and materials generating assets, same as I figure now. Producing food and bio-fuels is unlikely to go out of style for a while. And, I’ll wait to see how things go by November.

  3. postkeynesian
    September 20, 2021 at 4:55 pm

    The question is if this “bubble” are sustentable, i think that yes!!!

    interest rate, current account, saving of households, profits, public budget, etc.

    US will have high share prices for a long time.

    • John Behrens Jensen
      September 20, 2021 at 7:03 pm

      I agree. But, the Wiltshire 5000 is too broad, There is no particular reason why small caps might not fail and the Techs with no earnings may also fail. But, all the other prerequisites like high demand, consumer confidence, low historical interest rates and low labour costs are still in place for a quick recovery. The other reason is that equity is primarily held by people and institutions with deep pockets (the rich) and they are not likely to get overly nervous and bail out. Still, I’m guessing we are in for a correction before Christmas. But, not because of a Wiltshire bubble – most likely spooking investors due to a temporary NASDAQ correction.

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