Bubble

News!

Stock markets can be valued, and because they can be valued, the long-term risks involved in holding stocks vary from time to time. 

When stocks are cheap these risks are small, but when they are expensive the risks become very great indeed. 

In current conditions, the risks in holding stocks are too great to make them sensible investments. 

This approach is completely different than claiming that it is possible to know when the stock market has hit a peak or a trough.

 

All that the ability to value stocks provides is the ability to assess when holding them becomes too risky. 

On every occasion in the past that we can find, when a stock market has become as overvalued as Wall Street was at the end of the twentieth century, the consequences have been extremely bad for the economy as well as for investors.

– Andrew Smithers & Steven Wright, Valuing Wall Street, March 2000

July 15, 2026

The current level of stock market valuations remains – easily – the most speculative extreme in U.S. financial history, beyond both the 1929 and 2000 extremes. Our baseline estimate is that the S&P 500 has a material risk of losing something on the order of 75% over the completion of this cycle, a view that’s shared by GMO’s Jeremy Grantham. We can narrow that baseline estimate to a loss of about 55% if we assume that the robust profit margins of the past decade are permanent.

John P. Hussman, Ph.D.
President, Hussman Investment Trust

July 2026