Why the stock market is so hot: How to spot a bubble
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Why are stock prices so hot right now?
The S&P 500 is up over 14% over the last 12 months, thanks in part to a record $10.3 trillion in record earnings and record-setting profits from a variety of companies, including Apple, Netflix, Facebook, Apple, Google, Amazon, and Facebook.
But investors have been trying to figure out whether the stock boom will continue into next year, when they are due to get another boost from an economy that is still struggling to recover from the financial crisis.
Here are some of the questions investors have asked about the market’s prospects: Is the stock bubble over?
No, says economist William Lazonick of the Center for Economic and Policy Research.
Stock prices are not overvalued.
Lazonicks says they are “the exception,” and not the rule.
They’re “a bubble, and if it’s over, the stock markets will recover.”
Is it just a bubble?
“It’s an interesting question,” says William Black of the Brookings Institution.
“It is possible that the market is overvalued because people are taking on too much debt, because people aren’t spending enough on retirement, and so on.
But I think it’s more likely that the bubble is a bubble because of the excessive short-termism that we see in the stock and bond markets, as well as a combination of that and some other factors.
And I think the Fed is probably the culprit, because they have been so tight with bond purchases, and they’re going to have to tighten that up a bit more if they’re to stop the excess money in the market from taking a bigger bite out of the economy.
“I think it is a very real bubble. “
Yes,” says Black.
“I think it is a very real bubble.
It has been for quite some time.
I think that the markets are going to get out of this bubble and then the markets will go back to normal.
And it’s going to be a very difficult adjustment to make, given that we’re not in an inflationary environment, and we’re still very vulnerable to deflation.
But the question is, will it be easy?
I don’t think it will be easy, given the fact that we’ve been through a great deal of inflation, and I think people are going, well, I can’t imagine that this is going to last.
So that may be one of the reasons it’s been so hard for the markets to recover.”
And why do you think the stock price boom is so strong right now: Because people have been buying more than they’re spending.
As we mentioned above, a record-high $10 billion was announced last week from Apple.
And as we said, Apple is a company that has invested a lot in building its products.
So it’s a lot of money that is being spent, and it’s making the stock soar.
But as we mentioned earlier, this bubble is not a bubble right now.
What is a stock bubble?
That’s the question that many investors are asking.
So Lazonik says that he thinks there is a “great deal of short-sightedness” in the way people are investing, and that “investors are taking advantage of the fact they’re having a very low yield of return on equity.”
He says this is “very shortsighted” given that “there are very few stocks that have been trading at such a high level in the last several years.”
Is this a bubble or a bubble correction?
This is a question that has been debated for years.
“What is a high-yield bond?”
Lazonicks says it’s not really a bubble at all.
“They have a very high yield of yield on the bond,” he says.
So why is the bond so cheap?
“They’re investing in things that are very highly risky and very high-cost, and there is not enough of them,” Lazonikkles says.
But it’s also important to remember that these are not high-risk investments.
They are risky because they’re making a huge amount of money on them.
And that is one of their big assets.
“You have to remember,” Lavinick says, “that bonds are the most widely used investment product in the world.
It’s very important to understand that bonds are more risky than stocks.”
What can you tell me about the risks that investors are taking?
Investors have been looking at the risks of debt and high-growth sectors, and have been worried that the stock bust could happen.
That’s why they are buying bonds at all, because that’s what’s coming out of their portfolios, and people are buying those bonds because they are not going to buy stocks anymore.
What’s the big takeaway from all of this?
Well, Lazonink says that the stocks bubble is “a very real and very dangerous bubble, that will be a long time coming.”
And he says that there is “an opportunity to make an adjustment.”
“I would say the biggest challenge
Why are stock prices so hot right now?The S&P 500 is up over 14% over the last 12 months, thanks…