Disaster Is Inevitable

Disaster Is Inevitable When The Two Decade-Old Stock Bubble Bursts

By Jesse Colombo
Forbes

April 8, 2015

Six years after the Global Financial Crisis, the U.S. stock market continues to soar to new heights with nary a pullback or correction. In this piece, I will explain why the stock market is experiencing a new bubble that is actually another wave of the bubble that has existed since the mid-1990s.

A two-decade old bubble? Yes, you’ve read that correctly. Most people will consider this assertion preposterous, but the facts don’t lie. Though the U.S. stock market has been experiencing a bubble for two decades, it will not last forever. I believe that the ultimate popping of this bubble will have terrifying consequences for both investors and the global economy that is tied so closely to the stock market.

The SP500 stock index has more than tripled since its low in 2009, but that doesn’t mean that we are out of the woods. On the contrary, this is the calm before the storm.

Sp500

^{Source: St. Louis Fed}

Since the mid-1990s, the U.S. economy and stock market has experienced three different bubbles: the 1990s Dot-com bubble, the mid-2000s housing bubble, and now another bubble that includes stocks, bonds, tech startups, certain segments of the housing market, higher education, and much more. I believe that this new bubble is creating what I call a “Bubblecovery” or a bubble-driven temporary economic recovery that will end in another crisis.

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Flash Boys Michael Lewis Best Price: $1.17 Buy New $5.79 (as of 11:15 UTC - Details)

Dark Pools: The Rise o... Scott Patterson Best Price: $6.32 Buy New $11.74 (as of 06:25 UTC - Details)

Broken Markets: How Hi... Saluzzi, Joseph C. Best Price: $7.44 Buy New $24.98 (as of 05:40 UTC - Details)

The Secret Club That R... Kate Kelly Best Price: $2.23 Buy New $16.87 (as of 09:55 UTC - Details)

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Disaster Is Inevitable When The Two Decade-Old Stock Bubble Bursts

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