Everyone knows it and the massification of money quickly and without consequences is what we are observing as linear behavior on Wall Street. But it can certainly also be seen as a phase of mania, a third stage where deception and greed are currently predominant in the valuation of stocks.
We can then recognize an interesting increase in the financial bubble that currently surrounds the stock market. The evaluation of the parameters that are manifested for such consideration to be a currently feasible element could be declared in the financing costs and the extreme speculation behavior exposed in many active investments of companies whose demand cannot be justified in relation to the appraisal they present.
What is dangerous about this scenario is that we are seeing an empty evaluation and without production commitment, some elements that are added to the traces of existence of a bubble that appears hidden. The denial of the Fed and its monetary direction make share buyback policies a natural element in this spiral of financial distortions. The constant printing will now pass into the hands of a new administration, a stimulus of 1.9 billion is active to begin the opening of a policy that we know and will see develop.
A simple concept of a financial bubble arises "spontaneously when the price of an asset, whatever it may be, be it stocks, bonds, real estate or whatever is likely to be listed, begins to rise disproportionately compared to its real or intrinsic value, or in other words, the value it should have ", iProfessional.
With this we want to specify that the return of reality can be hard and consequently a bear trap that arises under an evident market capitulation. The path to normality is difficult and is what many analysts warn of the consequences of the bursting of this mega bubble.
Until recently, a nice reference to an article published by Jeremy Grantham, head of the investment company GMO, about the immense bubble that looms in the markets, and of course, its conditions for such an increase, play a key point in many of the articles that superimpose an outboard activity that would therefore be noticed, beyond repeating and overcoming events such as the one registered in 1929, 1990, 2000 or 2008.
His approach shows "extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investment behavior", ingredients to superimpose any ideas you may have about an irregular market situation.
Only those who accept the risk continue to operate under the speculation scheme that prevails in emerging scenarios. It is clear that the lurking shadow of the debtor does not prevent the existence of a yield curve that is maintained with the repurchase of bonds and shares, a strategy that is used to maintain interest rates.
Yes, certainly it is already something that everyone knows, but some run to continue inflating and altering prices, others simply wait for it to fall, but ultimately it is a bubble of which we are all inside. And then they go on emphasizing that Bitcoin is a bubble without realizing that it is the needle that awaits the burst.
The cited concepts were taken as a reference of the following articles whose links you place below at the end of this writing. His input helped to further emphasize the issue under discussion.
- https://www.iprofesional.com/finanzas/331657-atentos-inversores-puede-estallar-la-burbuja-en-wall-street
- https://www.wsws.org/es/articles/2021/01/15/wall-j15.html
