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15 signs that we are near the peak of an absolutely massive stock market bubble

15-signs-that-we-are-near-the-peak-of-an-absolutely-massive-stock-market-bubble

One of the men that won the Nobel Prize for economics this year says that "bubbles look like this" and that he is "most worried about the boom in the U.S. stock market."  But you don't have to be a Nobel Prize winner to see what is happening.  It should be glaringly apparent to anyone with half a brain. The financial markets have been soaring while the overall economy has been stagnating.  Reckless injections of liquidity into the financial system by the Federal Reserve have pumped up stock prices to ridiculous extremes, and people are becoming concerned.  

In fact, Google searches for the term "stock bubble" are now at the highest level that we have seen since November 2007. Despite assurances from the mainstream media and the Federal Reserve that everything is just fine, many Americans are beginning to realize that we have seen this movie before.  We saw it during the dotcom bubble, and we saw it during the lead up to the horrible financial crisis of 2008.  So precisely when will the bubble burst this time?  Nobody knows for sure, but without a doubt this irrational financial bubble will burst at some point.  Remember, a bubble is always the biggest right before it bursts, and the following are 15 signs that we are near the peak of an absolutely massive stock market bubble…

#1 Bob Shiller, one of the winners of this year's Nobel Prize for economics, says that "bubbles look like this" and that he is "most worried about the boom in the U.S. stock market."

#2 The total amount of margin debt has risen by 50 percent since January 2012 and it is now at the highest level ever recorded.  The last two times that margin debt skyrocketed like this were just before the bursting of the dotcom bubble in 2000 and just before the financial crisis of 2008.  When this house of cards comes crashing down, things are going to get very messy

"When the tablecloth gets pulled out from under the place settings, you're going to have a lot of them crash and smash on the floor," said Uri Landesman, president of Platinum Partners hedge fund. "That margin's going to get pulled and everyone's going to have to cover. That's when you get really serious corrections."

#3 Since the bottom of the market in 2009, the Dow has jumped 143 percent, the S&P 500 is up165 percent and the Nasdaq has risen an astounding 213 percent.  This does not reflect economic reality in any way, shape or form.

#4 Market research firm TrimTabs says that the S&P 500 is "very overpriced" right now.

#5 Marc Faber recently told CNBC that "we are in a gigantic speculative bubble".

#6 In the United States, Google searches for the term "stock bubble" are at the highest level that we have seen since November 2007 – just before the last stock market crash.

#7 Price to earnings ratios are very high right now…

The Dow was trading at 17.8 times the past four quarters of earnings of its 30 components, according to The Wall Street Journal on Friday. That was up from 13.7 times its earnings a year ago. The S&P 500 is trading at 18.7 times earnings. The Nasdaq-100 Index is trading at 21.5 times earnings. At the very least, the ratios are signaling that stock prices are rich.

#8 According to CNBC, Pinterest is currently valued atmore than 3 billion dollars even though it has never earned a profit.

#9 Twitter is a seven-year-old company that has never made a profit.  It actually lost 64.6 million dollars last quarter.  But according to the financial markets it is currently worth about 22 billion dollars.

#10 Right now, Facebook is trading at a valuation that is equivalent to approximately 100 years of earnings, and it is currently supposedly worth about 115 billion dollars.

#11 Howard Marks of Oaktree Capital recently stated that he believes that "markets are riskier than at any time since the depths of the 2008/9 crisis".

#12 As Graham Summers recently noted, retail investors are buying stocks at a level not seen since the peak of the dotcom bubble back in 2000.

#13 David Stockman, a former director of the Office of Management and Budget under President Ronald Reagan, believes that this financial bubble is going to end very badly
 

We have a massive bubble everywhere, from Japan, to China, Europe, to the UK.  As a result of this, I think world financial markets are extremely dangerous, unstable, and subject to serious trouble and dislocation in the future.

#14 Bob Janjuah of Nomura Securities believes that there "could be a 25% to 50% sell off in global stock markets" over the next couple of years.

#15 According to Tyler Durden of Zero Hedge, the U.S. stock market is repeating a pattern that we have seen many times before.  According to him, we are experiencing "a well-defined syndrome of 'overvalued, overbought, overbullish, rising-yield' conditions that has appeared exclusively at speculative market peaks – including (exhaustively) 1929, 1972, 1987, 2000, 2007, 2011 (before a market loss of nearly 20% that was truncated by investor faith in a new round of monetary easing), and at three points in 2013: February, May, and today."

As I mentioned at the top of this article, this stock market bubble has been fueled by quantitative easing.  Easy money from the Fed has been artificially inflating stock prices, and this has greatly benefited a very small percentage of the U.S. population.  In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.

When this stock market bubble does burst, those wealthy Americans are going to be in for a tremendous amount of pain.

But there are some people out there that argue that what we are witnessing is not a stock market bubble at all.  That includes Janet Yellen, the new head of the Federal Reserve.  Recently, she insisted that there is absolutely nothing to be worried about…

"Stock prices have risen pretty robustly," Yellen said. "But I think that if you look at traditional valuation measures, you would not see stock prices in territory that suggests bubble-like conditions."

We shall see who was right and who was wrong.  Let's all file that one away and come back to it in a few years.

So where are stocks going next?

If you had the answer to that question, you could probably make a lot of money.

Yes, the current bubble could burst at any moment, or stocks could continue going up for a little while longer.

After all, the S&P 500 has risen in December about 80 percent of the time over the past thirty years.

Perhaps that will be the case this December as well.

Perhaps not.

Do you feel lucky?

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter hereVia ActivistPost

Featured image: Morgan Stanley ticker, Times Square by http://www.flickr.com/photos/27237408@N03/9183391040

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3 Comments

  1. i do agree about this bubble that will burst soon. you did not got Robert Wiedemer predictions also, who is very famous about this.i am born again Christian, and do believe strongly this will be the next big event. this is all happening people are very sinful, very greedy , lie after lie , from the US president most of the elected elite in Congress and Senate,this will not going forever like this.

  2. Keep up the good articles on here. It's nice to see a change of pace instead of talking about solar flares or earthquakes all the time. It's not a bad thing but throwing different info on is a breath of fresh air.

  3. Keep writing. You are writing the REAL history of the mankind. Everyone is writing it. People are individuals. No two things are the same in this universe.

    We are all individual watchers. We are all individual watch-ees.

    The insanity is numbered.

    But don't let the anger bother you.

    It is no one's fault in the end.

    The life of humans is hard. VERY VERY VERY hard.

    I have to remind myself when I fee angry, desperate, and exhausted.

    They created us. They held our hands from the day one. They taught us everything we know: agriculture, cooking, domesticating animals, curing illness, surgery…

    We fell down. They held us back up. We fell down again. They held us back up again. It is a tough love. They punish us when we reach the limit. We did the same to our offsprings when we held their hands to teach them how to walk…

    Then they left us alone for a while as we TRIED to strike out on our own. But we have not done well at all.

    We are lost, so lost.

    More and more people realize we are coming to a dead end.
    This is where/when the time and space gets very very very compressed. It is suffocating…

    But you have no choice but to move with the old Earth.
    Time is important in order for the change to occur. Nobody knows when. This is a tough part. To us, they are maji literally. You can see how widespread this ancient word is in every culture everywhere.

    If this makes sense to you, let everyone you know know.

    We need more humans to lift their heads up in the SILENT NIGHT to watch our heaven. Pray that we miss them so damn much…

    Many more humans will be doing the opposite, lowering their heads, texting, tweeting and clicking. Leave them alone, I say.

    Orion is rising again from the East. Talk to him.

    But, No shit-oogle, no ponzi scheme. NO fiat shit-rrency. No banner ads. No adwordshit
    No NASAshit. No GMO. NO plastic. No shitHarvard. NO shitMIT. NO shitStanford. No shitPetroleum.

    No Fukushima.

    No Amazon dot shit.

    They were not included in the day one. They will not be included in the end.
    Because space/time is ONE continuos stream, one after another, one kind against
    the other.

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