Breathe on the stock bubble and it just might burst

The Buffett Indicator is flashing red. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Read in browser

This is the Weekend Edition of Bloomberg Opinion Today, a roundup of the most popular stories Bloomberg Opinion publishes each week based on web readership. New subscribers can sign up here; follow us on Bluesky, TikTok, Instagram, LinkedIn and Threads. It Won’t Take Much to Burst the Stock Market Bubble — Bill Dudley It’s easy to make the case that the US equity market is in bubble territory. After all, the major metrics point in the same direction: The Shiller cyclically adjusted price-to-earnings ratio: Currently 41, compared with a long-run average of around 17 and a high of 44 in December 1999. The real equity risk premium (the expected pickup in return from holding equities versus inflation-indexed Treasury bonds): Currently around 1.1%, or less than half the average since 2010. The Buffett Indicator (the US market cap-to-GDP ratio): Currently 240%. Warren Buffett has said he considers the US stock market overvalued when the ratio is above 100%. Of course, just because something is a bubble doesn’t mean it will soon burst. Bubbles often become much bigger and last longer than anticipated because the expansion of the bubble sustains the investment and profit growth that led to the bubble in the first place. The beliefs of advocates are reinforced, while skeptics lose conviction and influence. Nevertheless, there are several reasons why this bubble will likely burst before the end of 2027. Keep reading Allison Schrager Is It Better to Be Rich in Europe or in America? Nia-Malika Henderson Ocasio-Cortez’s ‘Woke 1’ Quip Is a Cynical Move Dave Lee Apple Must Heed the Lessons of Meta’s ‘Pervert’ Glasses Hal Brands The US Has Entered Its Aging, Endangered Hegemon Era Matthew A. Winkler Texas Represents the Tip of a Melting Municipal Bond Iceberg John Authers How Much Socialism Is America Willing to Swallow? More From Bloomberg Opinion Iran has sent Washington a list of demands so uncompromising, it seems designed for rejection. Marc Champion explains why peace is more dangerous than war for the Islamic Republic’s leaders. Apple accidentally revealed its next big wearable idea: AI-enhanced AirPods that can see what you’re looking at. Given the ongoing scrutiny over Meta’s smart glasses, Dave Lee urges Tim Cook to learn from Mark Zuckerberg’s mistakes. Have grades lost their meaning? Law Professor Noah Feldman‬ weighs in on Harvard and University of Michigan’s recent grade policies. If you’re a fan of Bloomberg News’ Pointed quiz, check out Alphadots, a daily word puzzle with a plot twist. We’re improving your newsletter experience and we’d love your feedback. If something looks off, help us fine-tune your experience by reporting it here. Follow Us You received this message because you are subscribed to Bloomberg’s Opinion Today newsletter. If a friend forwarded you this message, sign up here to get it in your inbox. Unsubscribe Bloomberg.com Contact Us Bloomberg L.P. 731 Lexington Avenue New York, NY 10022 |