The

Bear is Poised

To Strike

The Question is Only When?

At todays valuation* – Money Chimp.com – the next ten years estimated return for stocks held or purchased today (S&P 500 index or all stock growth fund) is – drum roll please – negative 1.89% total return! 

The chart below though a tad dated clearly shows higher the percentage of stock ownership as a group, in this case the entire U.S. population, lower the future returns.  As confidence in markets builds more and more people pile into stocks pushing up all of the fundamentals until valuations become unsustainable and the house of cards collapses.

*8-30-2024 Shiller PE 36.06 dividend yield 1.29% for S&P 500          

Excerpt below from Charles Hugh Smith Substack 

In the fairy tale, the economy is "strong" for all the right reasons: people are investing in new companies, spending lots of money, hiring more employees, and so on. In this fairy tale version of economics, the occasional spot of bother-- a "weakening economy"--is deftly resolved by the central bank lowering interest rates, which magically encourages everyone to return to their happy speculative, consumerist ways.

In La-La-Land, there are no bubbles, just enthusiasm for new technologies with limitless potential to reap billions in new profits. It's not a bubble, we’re assured, it's simply strong fundamentals: sales are soaring, profit margins are fattening, and there's no end in sight.

The chart of the dot-com bubble's euphoric ascent and eventual collapse is instructive: note how strong fundamentals eventually returned to the pre-La-La-Land level, wiping out all the wealth created by the bubble.