Investors look at a bubble in the stock market and again say: "this is different"

Hundreds of years of market history show that the euphoria in the stock market cannot last forever. But people, as usual, don't believe it, says Don Calcanyi, investment director at Mercer Advisors.

Even if the US stock market is not in an obvious bubble, it is clearly overbought, writes investment director of Mercer Advisors ($ 20 billion under management) Don Calcanyi. According to him, this is indicated by any indicators from the P / E ratio (the ratio of the market value of a share to annual earnings per share) to the so-called Buffett indicator, which is the ratio of the capitalization of the S&P 500 index to US GDP.

At the same time, many market participants ignore such alarming signals and argue that this time everything will be different thanks to the generosity of the Fed, vaccines and everything else. These conversations convince Don Calcanyi that today, as in previous bubbles, investors are being tempted by new rules and paradigms.

“Every time the stock market reaches new highs, every time the market starts to boil, there are always people who say, 'this is different.' But hundreds of years of market history tell us that this cannot last forever, ”the expert concludes.