Economy & Investments

Records Galore: Are We Inside Another Stock Bubble?

It’s a been a long recovery since the Great Recession in 2008 when the housing market came crashing down and the world’s economy with it.

And from the looks of it, we’ve come roaring back and erased those losses with new market records on an almost weekly basis.

But now economists and investing experts are increasingly wondering aloud — and even warning — that things may be eerily like they were just prior to Black Monday.

Or perhaps in the Roaring Twenties in the lead up to the Great Depression.

Housing prices are soaring high, the Dow and other indexes are booming and investors seem almost blindly exuberant.

Does this mean we’re in another bubble? Some experts say yes, and that that bubble must inevitably pop…possibly soon.

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Here’s more from the Economist…

N HIS classic, “The Intelligent Investor”, first published in 1949, Benjamin Graham, a Wall Street sage, distilled what he called his secret of sound investment into three words: “margin of safety”. The price paid for a stock or a bond should allow for human error, bad luck or, indeed, many things going wrong at once. In a troubled world of trade tiffs and nuclear braggadocio, such advice should be especially worth heeding. Yet rarely have so many asset classes—from stocks to bonds to property to bitcoins—exhibited such a sense of invulnerability.

Dear assets are hardly the product of euphoria. No one would mistake the bloodless run-up in global stockmarkets, credit and property over the past eight years for a reprise of the “roaring 20s”, or even an echo of the dotcom mania of the late 1990s. Yet only at the peak of those two bubbles has America’s S&P 500 been higher as a multiple of earnings measured over a ten-year cycle. Rarely have creditors demanded so little insurance against default, even on the riskiest “junk” bonds. And rarely have property prices around the world towered so high. American house prices have bounced back since the financial crisis and are above their long-term average relative to rents. Those in Britain are well above it. And in Canada and Australia, they are in the stratosphere. Add to this the craze for exotica, such as cryptocurrencies (see Free exchange), and the world is in the throes of a bull market in everything.

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