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The Stock Market: A Bubble About to Burst?

Is Disaster Inevitable for Stock Market Investors?

NYSE-margin-debtI ran across an interesting article recently on Forbes.com by economic analyst Jesse Colombo with some controversial and thought-provoking research on the matter.

While many people are speculating (logically) that the stock market bull run can’t last forever, according to Colombo, the problem is potentially much worse than the possibility of a minor market correction.

Laying out his case (which many charts and graphs to illustrate) in “Disaster is Inevitable When the Two-Decade-Old Stock Bubble Bursts,” Colombo argues that the stock market has been in a bubble for most of the last two decades.

According to his analysis, the impressive recovery we have seen in the last 5-6 years (S&P 500 prices have tripled) is not a recovery at all. He argues that we have witnessed instead a “Bubblecovery” fueled by artificially low interest rates and the Fed’s “Quantitative Easing” policies.

In other words, the economy is being manipulated to produce more bubbles which prevent a true market correction from ever happening. Thus the “recovery” only has positioned the market for a bigger eventual fall.

Agree or disagree, Colombo takes a compelling stance that has generated over 600k views and much discussion.

What do you think?

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