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Investing.com: Searching for a Stock Bubble Pin

Investing.com: Searching for a Stock Bubble Pin

By: Christine von Liederbach
February 10, 2021
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Article by Gary Gordon in Investing.com

When money creating powers flood the financial system with cash and cash equivalents, market participants have a choice to make. They can hold the cash, securing a loss in purchasing power if they hold too long.

Or they can acquire assets like high-yielding bonds, stocks and real estate. Those assets should rise in value over the proverbial long-term.

The concern is that the money printing powers did not merely give the pandemic-weary economy a jolt. Central planners increased the M2 money supply 25% in 2020; the M1 money supply component pole vaulted 66%.

This kind of intervention? Nothing like it has ever been seen before.

At first glance, it appears to be helping everyone who has a stake in stocks. Even indirect holders who have pensions need the stock market to thrive if they hope to be paid by previous employers.

On the other hand, stocks have become divorced from economic reality. They bear little relationship to their underlying fundamentals.

Hyper-valuation is a feature of stock market bubbles. Yet it is not the pin that will burst a balloon.

Some wonder if speculative stupidity might do the trick. It might.

smaller retail traders have been manic in their attempts to leverage small dollar accounts. Get rich quick schemes tend to mark the end of a stock bubble’s run, not the beginning of it.

It may not be possible to identify the specific pin or group of pins that will prick the present-day stock market bubble.

Yet the level of speculative activity in everything from ….

To read this article and charts its entirety, click here.

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Although the information in this commentary has been obtained from sources believed to be reliable, The Gold IRA Company does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. The Gold IRA Company will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.

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