The Stock Market is Overpriced but will it ever tank again?

I’ve been thinking and saying it for the best part of 3 or 4 years. The stock market is overpriced, housing prices are too high, the market is going to crash. And yet for most of those years the market has been soaring.

Reflecting on my views I sometimes think I’m being a bit too negative. I’ve missed out on 5 years of solid gains by thinking that the market was going to crash and it never happening. There was a day in 2020 where it did fundamentally come true but the rebound was astronomical. A recovery to pre-covid levels within a year. The last recovery in 2008 took years.

But fundamentally businesses are closing all over the world, the big companies get bigger and the smaller companies either get gobbled up or go out of business. Those who are struggling like airlines take on masses amounts of debt to sustain themselves through the next lockdown period that we are in.

So why aren’t they crashing? Well the monetary easing policy is back on the agenda and now this time so is the fiscal easing. Austerity is dead. Spending is on. If it’s any reflection of the last 10 years, this means asset prices will continue to soar. But my question is by how much?

There is a certain point where too much debt, too much stimulus will be too much for investors. We appear to be overheating and creating bubbles again. I do still think a correction is in order and I’m still holding off on investing although my next entrenching won’t be so lengthy. When it does correct I’ll be back in and finding opportunities.

One investor I follow Gerald Celente is talking of a correction in the world leading currency of the USD. Gold and silver prices to spike and bitcoin to continue its soaring. Chinese Reminbi may become the leading currency in his eyes and all the studying I am doing with regard to the CFA suggests that he may not be wrong. When a country runs a massive current account deficit with another (I.e. US vs China) there becomes a point where the deficit country (US) has a depreciation in its currency. You can see this slowly happening already. China are not getting any weaker either.

So at a top level analysis all factors influencing the stock markets valuation indicate that we are in the ends of a cycle. But when that cycle ends I could not say. If we remember back to the Big Short the investment manager who predicted the crash had to wait another year or so to see his forecast come to fruition, because he didn’t factor in all the shananigans that would go on in the background.

Anyway I opened an investment account yesterday in an attempt to start investing because I felt I was missing out on all these gains, only to close it as I had literally no rational reason to do so. I guess this is why bubbles happen. People just want to ride the gold train like everyone else but forget about the alarms that are ringing around them. In the future I will ride the fun train instead of observing from a distance but I will pick a safe point to get off long before the blown up railway bridge down the track.

I am not giving investment recommendations and anyone interested in the investments I am discussing should do their own independent research. I do not take any liability for any loss associated with your investment.