Scams evolve: Penny stocks to crypto, housing, AI; Algos echo July’s momentum loop; only large stocks peak, crash imminent. Todays bubble compared with 1999 and 2008

by
Sharing is Caring!

Everything feels so high.

SPX with 120 month moving average. Dec 2024: SPX 6000, 120MMA 3400.

New eras, same bubbles: the forgotten lessons of history

With US equities at record valuation peaks, investors should re-examine their risk appetite

As US equity markets trace the contours of the third great speculative bubble in history, investor confidence in a new economic era has reached extreme levels.
Among several valuation measures setting record highs is one that has reliably been a gauge for the subsequent returns and potential losses of the S&P 500 index over the following 10 to 12 years: the ratio of the market capitalisation of US non-financial companies to “gross value-added” or corporate revenues generated incrementally at each stage of production. Since early 2022, this metric has rivalled and now exceeds the peaks of both 1929 and 2000.

See also  Here’s the video. We hear Chipotle is hiring, dear. And those eyebrows, please explain.

See also  Regulating Crypto Under Premise of Climate Change

HouseOfCards: “hedge fund leverage and concentration are a specific example of the vulnerabilities that could lead to system-wide risks and warrants continued and careful monitoring”.

Hedge funds are using leverage to build larger positions in UK government debt, creating potential new risks in the financial system, the Bank of England has warned.
Dave Ramsden, a BoE deputy governor, said in a speech on Monday that “hedge fund leverage and concentration are a specific example of the vulnerabilities that could lead to system-wide risks and warrants continued and careful monitoring”.
Giving details of a new funding window for non-banks that the BoE plans to offer in periods of financial stress, Ramsden said the vulnerabilities created by the increased leverage and concentration of hedge funds “can amplify shocks”.