The stock market is a timebomb waiting to go off

US equities today account for more than 60pc of the value of global equities as a whole, up from around 40pc 15 years ago.

Granted, the US continues to grow more strongly than much of the rest of the industrialised world and it enjoys a commanding lead in many of the technologies of the future.


Virtually all investment observers of any longevity seem to share this view, but few are yet brave enough to stick their necks out and call the top.

NOBODY KNOWS ANYTHING

Instead, they talk of equity markets being “priced to perfection”, by which they mean there is little or no room for mishaps. 

Goldman Sachs strategist says stocks are priced for perfection

The stock market is at the same valuation as when Greenspan made his ‘irrational exuberance’ comment

https://englundmacro.blogspot.com/2025/01/most-people-assume-that-s-500-index.html


Fear of missing out, or Fomo, 

https://englundmacro.blogspot.com/2025/09/crash-of-1929-it-was-fomo-plus-debt-its.html

further drives the stampede towards the cliff edge. If everybody else is getting rich from America’s stock market boom, the temptation to join in becomes almost irresistible.

First and most important, valuations, greatly inflated by excitement over prospects for artificial intelligence (AI), are becoming divorced from reality.

The forward price-to-earnings (PE) ratio on the S&P is admittedly not quite as high as it has been in recent years, but it is still way above its long-run average.

In any case, it may not be much of a guide, since the forward PE reflects profit expectations, which may be as inflated as the share prices themselves.

A better guide to valuation is the so-called “Shiller PE ratio”, or the cyclically adjusted PE ratio (Cape ratio).

It generally requires some sort of a trigger to shift sentiment from greed to fear. 

What Triggered the Crash? - Hussman Funds

Right now, it’s hard to see what it might be, with markets seemingly determined to ignore almost any piece of bad news that is thrown at them.

The bad-news-is-good-news stock market

Jeremy Warner Telegraph 27 September 2025 

https://www.telegraph.co.uk/business/2025/09/27/the-stock-market-is-a-timebomb-waiting-to-go-off/


What happens if the US economy crashes?

https://www.youtube.com/watch?v=xJ1WQzqzaao


Kommentarer

Skicka en kommentar

Populära inlägg i den här bloggen

Pfizer in 2019 sold $20 billion of drugs in the U.S. Its federal tax bill? Zero; Ireland

Trump has already singled out pharma companies and countries like Ireland that reap the benefits of tax-avoidance moves.  Despite its small size, Ireland ran an $87 billion trade surplus with the U.S. last year—larger than any country except China, Mexico and Vietnam. https://www.wsj.com/health/pharma/how-trumps-tariffs-could-upend-pharmas-overseas-tax-strategy-5b8ca758 Is Ireland vulnerable again as the world’s vast shadow banking system starts to crack? Shadow banking is the dog that has not barked during the latest global spasm of financial stress. This is very fortunate, especially for small countries such as Ireland that have bet the farm on this industry. https://englundmacro.blogspot.com/2023/04/is-ireland-vulnerable-again-as-worlds.html Cayman Islands https://en.wikipedia.org/wiki/Cayman_Islands What the heck is happening in the Cayman Islands? A Sunny Place for a Shady Online Business https://englundmacro.blogspot.com/2021/12/a-sunny-place-for-shady-online-business.html Ti...
Läs mer

My blogg short index

Bild
1968 Vojne, vojne, vänsterdårarna kommer AI Artificial intelligence https://englundmacro.blogspot.com/2025/06/ai-artificial-intelligence.html Akvedukten vid Zaghouan, Sven Otto Littorin och Niall Ferguson. Denna vackra betraktelse från 1994 har sedan dess legat i mitt bakhuvud. https://englundmacro.blogspot.com/2024/04/akvedukten-vid-zaghouan-sven-otto.html Alistair Darling, Northern Rock och Royal Bank of Scotland https://englundmacro.blogspot.com/2025/07/alistair-darling.html Bank stress tests https://englundmacro.blogspot.com/2025/06/bank-stress-tests.html Bessent https://englundmacro.blogspot.com/2025/06/bessent.html Gordon Brown https://englundmacro.blogspot.com/2025/07/gordon-brown_5.html Buy the dip https://englundmacro.blogspot.com/2025/07/buy-dip.html Fastighetsbolagen https://englundmacro.blogspot.com/2025/07/fastighetsbolagen.html Tomas Fischer https://englundmacro.blogspot.com/2025/07/tomas-fischer.html James Grant https://englundmacro.blogspot.com/2025/07/james-grant.h...
Läs mer

Things might be different this time; mitt senaste storverk

Bild
The breakdown of monetarism During the past decade, the links between economic activity, inflation, and monetary policy that were taken for granted in the 1980s and 1990s have completely broken down.  The pre-crisis dogma that inflation “is always and everywhere a monetary phenomenon” has turned out to be nonsense, at least for advanced economies, where central banks have printed money like wallpaper without any inflationary response. Anatole Kaletsky Project Syndicate 23 April 2019 https://englundmacro.blogspot.com/2019/05/equity-prices-bond-prices-qand.html Detta är den grundläggande tanken för det som följer: Det fördes länge en debatt om vilket M som skulle vara bäst för att förutse framtiden. Själv har jag tänkt mig att hushåll och företag har en skattkista där överst finns kassa och bank, längre ner värdepapper, belåningsmöjligheter och fastigheter och längst ner "The Family Silver". https://englundmacro.blogspot.com/2025/01/vad-ar-pengar-m1-m2-m3-osv-monetary.html So, ...
Läs mer