2024-04-03 13:45:00 ET
Summary
- Nearly 100% of US equity valuations are at or near all-time record overpricings, while many reliable signals of upcoming market behavior have approached or surpassed all-time record extremes. Investors are ignoring these extremes in the market.
- In the final months of 2022, all forecasters insisted that there would be a U.S. recession. Now almost none of them expect a recession. They're going to be as wrong in 2024 as they had been in 2023.
- The rally for AI shares and related large-cap popular names since October 2023 has been impressive. However, all extremes come to an end sooner or later. Very few analysts have pointed out the obvious parallels between the internet bubble of 1999-2003 and the current AI bubble.
We have recently experienced several simultaneous extremes which investors are ignoring, due largely to two key factors: 1) investors will almost always believe that whatever has occurred in recent months will continue over the next several months, regardless of the merits of such a momentum argument; and 2) the Goldilocks myth of a "soft landing" has become so widely prevalent that the vast majority of individual investors in their retirement plans and hedge funds have become dangerously overcrowded into the most popular U.S. stocks. Nearly 100% of equity valuations are at or near all-time record overpricings, while many reliable signals of upcoming market behavior have approached or surpassed all-time record extremes....
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Nine Align; Benign? Nein!