Crash Alert: An Unbalanced Market In Three Charts
John Rubino

During a bull market, imbalances build up that seem scary but are not, in the moment, a deal-breaker. It’s only with hindsight that we look back and say, “Oh yeah, that’s where it started to change.” 

This series points out the trends that will — eventually — be the warnings we should have heeded: 

Households are overinvested in stocks

From the Kobeissi Letter:

US households' stock allocation as a percentage of financial assets hit a new record of 41.6% in Q1 2024. This is up from 30.5% in 2020 and even higher than in the 2000 Dot-Com bubble peak of 38.4%. 

Since the 2008 Financial Crisis, household participation in stocks has more than DOUBLED. Since then, the Nasdaq has rallied 1,738% and the S&P 500 is up 702%. Since October 2023 alone, the Nasdaq and S&P 500 have seen 40% and 32% gains, respectively. 

Households are benefiting from the historic run in stocks.

Market breadth is back to Great Recession levels

From Game of Trades:

US stocks are expensive compared to the rest of the world

Overvalued From Any Angle

To sum up, US stock markets are being elevated to historically unusual levels by a handful of high-flying Big Tech companies that face rising competition (Nvidia), slowing growth (Apple) and/or anti-trust scrutiny (Google). And Americans are as heavily invested in those stocks as they’ve ever been. Someday we’ll look back on this as a dangerous combination. 

 

DollarCollapse.com is managed by John Rubino, co-author, with James Turk, of The Money Bubble(DollarCollapse Press, 2014) andÊThe Collapse of the Dollar and How to Profit From It (Doubleday, 2007), and author of Clean Money: Picking Winners in the Green-Tech Boom (Wiley, 2008), How to Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not Wall Street (Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He currently writes for CFA Magazine.

 

 

 

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