The stock market might be in for a prolonged period of low returns, according to a prominent Wall Street figure.
What Happened: John Hussman, the president of the Hussman Investment Trust, has cautioned that the current stock market rally, driven by a “fear of missing out” (FOMO), could lead to disappointing long-term results. This could mean a decade or more of poor returns, reported Business Insider.
Hussman highlighted several factors fueling the FOMO rally, including record highs, optimism about a “soft landing” for the economy, anticipated interest rate cuts, and excitement about artificial intelligence. “I do believe that current market valuations, whatever metric one chooses, are likely to be followed by weak-to-dismal 10-12 year total returns and deep full cycle losses,” he said.
One valuation measure, the S&P 500’s ratio of nonfinancial market capitalization to corporate gross value-added, suggests that the market is the most overvalued since 1929. This could indicate disappointing returns for investors in the long run.
“We can’t say with any certainty at all that stocks are at a market peak. We can also say with complete certainty that present conditions mirror what a market peak looks like,” Hussman warned.
Despite the ongoing ...
