If we see a bubble burst and crash with the current level of leverage, investment, debt and price evaluations? It'll be a massacre everywhere.
Again, I'm not being all doom and gloom. The market is really overvalued for numerous reasons. The amount of money that has come from the treasury in the last 23 years is more than came out in the previous 100 years inflation included. Low interest rates and easy money policy over that span has forced an extremely disproportionate amount of investment to move to equities or suffer guaranteed losses. The covid recovery story, a huge influx of retail investors, tons of momentum and now inflation putting more pressure on investment to generate a return is has created a wild situation. Covid recovery is going strong, all the bad news of the last 18 months has been ignored. Everyone piled on the don't fight the fed bandwagon and everyone is seeing these huge returns in tech, crypto and meme stocks. People are buying up $200 GME and it's somehow been normalized. It sure has made a lot of fat minnows but good lord it's turned into the world's biggest game of Jenga.
I've noticed a huge amount of Ai and bots being used to pump stocks and seeing the same type of analytics used combined with social media algorythms to really pump stocks and even moreso crypto. It's looks very similar to cambridge analytica/Facebook tag team in the 2016 election. It's really possible a couple big players are just waiting for the right moment to pull the cards. Wouldn't take much, just something like a couple big hedge funds, one big investment bank or one person like the prince of Saudi to move mega amounts of wealth from one side to another. Lots of fat minnows have been nibbling at the sharks for 18 months and forgot the shark bites back once in a while. It doesn't take this massive percentage share to make a market crash 20% in a day. $10M on some Ai tweeks on social media that slowly start favoring bullish stock views creating a buying frenzy. Ride the wave up, slowly draw down shares and add short positions. Wait for some some bad news and a little bit of fear. Once you reach a certain technical key have those pumping bots and influencers turn into bears, throw some misinformation in the mix and pay to have the ai flip to promoting bearish material and panic. Key support levels get wiped out, the trading algos and twitter stock movers all have the same stop points and it's been using against them. One minute you are having breakfast reading about $250k bitcoin by dinner $20T worth of market cap is gone. None of the above is particularly illegal, at least there are no agencies left with enough teeth to do anything about it.
If you think ivestment bankers, hedge fund managers and a world full of greedy bastages didn't look at all the PPE money and covid checks flying into the market and begin to think how to move that money into their accounts you're crazy. You don't think North Korea, Iran, China or Saudi can pull something like that off with ease then you haven't been paying attention.
With all that said, if the covid recovery can stay on track and be almost perfect. If tech, ai, green energy and are able to do what most are thinking is possible in the next decade. If wages continue to rise and inflation can get under control. If there isn't some other crisis, war, terrorist attack, energy crisis, asteroid, hyper-inflation, a complete supply chain collapse, super volcano or a major meltdown in some financial market then stocks may not only be reasonable but on the cheap side.
Again, not being a pessimist. I'm actually 90% long right now on the small percentage I have invested but when volatility spikes I jump to swing trading. I think the recovery is humming along and looking back at what the markets managed to manuever around the last 18 months is nothing short of a miracle. I do think it's overdue for a correction but if I was guessing it would be something like a crash, a quick test of some new found key support level then it'll be off to the races again but even that hasn't happened. It's just :rocketemojis: :moonemojis: :apeemojis: :diamondemoji: :handsemoji:. :hihi: