Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Retail Investor Euphoria Sign of Looming Market Bubble

  by    0   1

Investors may be seeing the first signs of the stock market bubble beginning to pop. Bloomberg is reporting a 5-month increase in retail investors in the S&P for any “like stretch since 2014”. At the same time, hedge funds, corporations and executives are starting to back out of equities.

The entrance of individual investors is traditionally a sign a bull market is being fueled by euphoria and less experienced investors. Top investors are usually the first ones to buy into the market, followed by less knowledgeable ones looking to take advantage. Retail investors tend to have less strategy and make more impulsive decisions, which can drive up asset prices and create a bubble.

Peter Schiff has been predicting the Fed-fueled stock market bubble for a year now. Low interest rates and borrowing costs have flooded markets with easy money, and valuations are still at their highest since 2008. Bank of America is reporting that fund managers are holding 1% less cash (5.8% to 4.8%) since a 15-year high hit last October. Less cash means more investment and less room for upside in US equities.

While some are suggesting more evidence of a “general sense of euphoria” is needed to call a top on the market, others are taking cues from past trends. Bloomberg reports, “current equity holdings are comparable to peaks in 1968 and 2007.”

Insider buying is also in decline with fewer executives investing in their own companies. According to InsiderScore, about 2,300 insiders bought shares of their companies last month, down from a one-year high reached at the start of the month.

Macro hedge funds are also mitigating their exposure to securities, while continuing to maintain a position in the dollar and commodities, according to Bank of America.

One of the most telling signs the market may be nearing a medium-term top in equities is the drop in corporate buybacks, which has slowed down significantly. Last year, US firms cut the purchase of their own stocks by 6%, the biggest drop since 2009.

What these moves signal is a retreat from stocks and bonds and an over-valued market set for a major correction. Most of the post-election Trump-effect on stocks is subsiding. While investors are still clinging to hopes of fiscal stimulus in the form of infrastructure projects, the latest defeat of Trumpcare and the lack of Republican support on the debt ceiling fight may complicate funding for major projects.

Now is the time contrarian investors put their money into safer alternatives like precious metals. Buying gold and silver is one of the best ways to wealth retention.
 

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Silver-Gold Ratio Opening Up Again

The silver-gold ratio has ballooned again, indicating that silver is once again a bargain buy. During a gold bull market, silver typically outperforms gold. We saw this during the big runup in the price of both metals through the early months of the pandemic. In the third quarter of last year, silver charted its best […]

READ MORE →

“Transitory” Inflation Strikes Again: FedEx Announces Big Rate Hikes

In yet another sign “transitory” inflation might not be so transitory, FedEx has announced plans to significantly hike shipping rates in 2022. FedEx said it will raise rates for US domestic, export and import services by 5.9%, on average next year. Some freight rates will rise as much as 7.9%. The company also plans to […]

READ MORE →

Chinese Gold Market Continues Post-Pandemic Recovery

The Chinese gold market continues to show signs of recovery after it was hit hard by the coronavirus pandemic. Chinese gold demand rebounded sharply in the first half of 2021 after plummeting in 2020, and imports remained strong in July, above 2019 levels, according to the latest data from the World Gold Council. China ranks as […]

READ MORE →

Fun on Friday: The Government Can’t Even Get Constitution Day Right

Today is Constitution Day. We’re supposed to be celebrating the day the Constitution was signed and presented to the states for ratification. But it’s pretty hard to celebrate because the Constitution is dead.

READ MORE →

CPI Housing Cost Calculation Hides True Extent of Inflation

The government CPI data for August came in slightly under expectations. Nevertheless, a 0.3% month-on-month increase in prices is significant. And a dig into the numbers reveals something wonky. The way the government calculates housing costs drastically understates rising prices and skews overall CPI to the downside.

READ MORE →

Comments are closed.

Call Now