S&P 500 is 'bizarrely overvalued' and could crash 49% as recession sets in, elite strategist says
S&P 500 is 'bizarrely overvalued' and could crash 49% as recession sets in, elite strategist says
Paul Dietrich of B. Riley Wealth said the stock market "bubble" was about to burst and could slash the S&P 500's value in half.
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Bears have predicted 11 of the last 2 crashes, this isn't news
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Nassim Nicholas Taleb, the author of the economics book, The Black Swan, had a great take on this. I'm paraphrasing but he was like how Economists can go in the news, make a prediction, and if they're wrong, nothing. But if they're right, they become a staple of business news and sell out all of their books. So financially, it's better to make a lot of predictions and hope to win the "I guess right" lottery.
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There's an old scam that runs the same way. On a 2 outcome wager like which team wins a game send 500 people prediction team A wins and 500 people team B wins. For the 500 people who got the right one send 250 team C wins and the other 250 team D wins. By the time you're down to ~7 people they all received 7 winning predictions in a row, then you ask them for a bet on a 'sure thing' for the 8th game.
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The crazy thing about speculative economy is that by releasing this article, businessinsider might scare some of the investors and so create a self-fulfilling prophecy.
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Shhh, it's exactly how stock is meant to work for them. Hype bubbles and "adjustments".
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I've always thought that about recession predictions. After all, economists measure consumer confidence and define the meaning of the results as
if consumers are optimistic, they will spend more and stimulate the economy, but if they are pessimistic then their spending patterns could lead to an economic slowdown or recession.
It's clearly reasonable to think that publishing panic-inducing articles like "stock market will soon CRASH 49%!!" would decrease consumer confidence.
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I think that's pretty much what the foundation series was about, predicting a system changes it.
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That's what they are paid to do. Big fund takes a short position, then pays analysts to produce stories to make their short position profitable.
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Cassandra complex
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Wouldn't that be the exact opposite of a Cassandra complex.
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Ahh, Business Insider, the most eager place in the world to let managers talk their book and frame it as news.
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lol. Unprofitable companies are getting billion dollar IPOs and we are shocked at this prediction?
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I'm curious what makes this man an 'elite' stategist.
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maybe he was a beloved space exploration game released in 1985?
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Hah!
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I could also fart hard enough to reach orbit. I probably won’t… but I could.
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Fart big, bro
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Gonna keep contributing monthly like always.
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Dollar cost averaging baby!
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pushes up glasses ACSHUALLY. Ok, JK.
But for real, DCA usually implies one has a choice. "Do I lump sum this or DCA?" In this case, I don't have a lump sum, I just add money from my paycheck every month.
If I did have a lump sum to put into the market, I would not DCA since DCA does worse ~66% of the time. Most of the time, one would be better off putting the entire sum into the market all at once.
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We’ve been due for a recession since 2020–the drastic pullback for several months at the onset of COVID was hardly a “recession,” more like a blip. I’ve finally stopped saying it’s imminently going to happen, which maybe means it’s going to happen now.
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It's bad economics to dismiss a recession as if it didn't happen just because it wasn't as severe as you would like. Many recessions are mild and little more than a "blip", that's completely normal and ignoring them will only lead you to faulty conclusions about what is actually going on with the economy.
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My comment was mostly intended as a joke (like me being bullish is going to make the market move in the other direction), but I do think that what happened in 2020 was artificially can-kicked down the road by unprecedented government intervention in the market. So it’s less of a “severe as I’d like” scenario and more of a “curtailed by massive global intervention in the economy.” Maybe that staved it off forever and we will have a soft landing? Possible, but I don’t think so.
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Curious, isn't it, that recession talk is coming back right when an election is heating up...
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Predictable
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This "elite strategist" is welcome to short the S&P 500 if he's so confident and not just trying to get attention. The net of all people with money in the stock market disagree with him so he could make some good money if he's right.
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We've been pumping too much money into the economy. Where do you think most of it ends up? Not in the pockets of working people.
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Not "the economy", just a few select large corporations and the financial industry. It's not like your uncle's bakery is exploding right now.
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Still waiting for that padded recession the news mentioned a month ago. Padded for the rich investor assholes, but not for the average American.
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AI and related companies are here to stay for the most part. Overvalued in the short term but not in the long term, as again, this stuff is going to stay.
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They're not nearly making the money that is being put in yet. It's a giant bubble for now.
The internet was here to stay as well. https://en.wikipedia.org/wiki/Dot-com_bubble
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And yet I see a huge difference, as most of these current overvalued companies are solid. They might be overvalued in short term, as the upcoming revenue doesn't reflect the huge pile of investor money yet, meanwhile the dot-com bubble was mostly build on companies without any real value behind. It will get a short drop off at some point because of disappointed investors, but no bubble. AI will replace a ton of jobs and companies will want a piece of this money pile and they'll keep investing into it.
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What AI companies are in the S&P500?
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Google? Amd? nvidia?
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Be a great time to buy then.