Wall Street bearish investors are out of favor–but evidence is they're right
Bearish sentiment is rising on Wall Street due to warnings of overvaluation by analysts like JP Morgan's Marko Kolanovic. Predictions indicate a possible 24% drop in the S&P 500. Investors are advised to be cautious and analyze fundamental market factors for informed decisions.
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Bearish sentiment is growing on Wall Street as some analysts, like JP Morgan's Marko Kolanovic, warn that the stock market is overvalued. Kolanovic predicts a 24% drop in the S&P 500 by the end of the year due to inflated stock prices compared to earnings growth. Despite the recent bull market, concerns arise from historically high price-to-earnings ratios and potentially unsustainable earnings growth. The combination of high PEs, inflated earnings, and rising real yields could lead to poor stock returns in the future. While short-term market predictions are uncertain, the long-term trend suggests that high valuations may eventually correct. Investors are cautioned to be wary of the current market conditions and consider potential risks associated with overvalued stocks. The article highlights the importance of analyzing fundamental market factors rather than short-term fluctuations in making informed investment decisions.
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3 commentsWhile I'm very bearish (ie, smart !) on the current state of the US stock market, I wouldn't recommend shorting to anyone - it's just too risky and frustrating.
The next decades will be very interesting though - there are very significant changes in demographics dynamics. I'm wondering how much of past stock performance is due to simply populations of Western countries growing and markets expanding ? What happens when that stops ?
If real estate in small villages of Japan / Italy is an indicator, there is a decent chance that future profit growth won't look anything like the past one.
Real estate in China is probably even more interesting - Chineese economy was fuelled for a long time by a real estate boom. As of today, they have build so many homes / appartments, that they can home 2-3 billion people according to estimates. But... as everybody knows, Chinas population is set to shrink from 1.4B to less than 1B by 2100, and given the size of the country relative to world's population, they can't simply 'import immigrants' like smaller nations could.
So what happens next ? I don't think the world has ever faced such a crazy situation.
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