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Lombardi Publishing Corporation (www.LombardiPublishing.com), a 29-year-old consumer publisher that has served over one million customers in 141 countries, is weighing in on the current state of the bull stock market and explains why a 1987-style stock market collapse is in the works.“Fear is a natural element of investor psychology when it comes to a bull market; it means investors are paying close attention to technical and fundamental data, the global economy, and the economic outlook—looking for signs that a bull market will end,” says economist and lead contributor Michael Lombardi. “Signs pointing to the end of a bull market include extreme valuations and investors being overly enthusiastic about returns. And that is exactly what we are seeing on Wall Street. Investors are far too complacent and that’s very dangerous.”
Lombardi explains that in early March, the bull market on the S&P 500 celebrated its six-year anniversary. Up more than 215% since early 2009, the S&P 500 is currently trading near 2,100. But for the first quarter of 2015, corporate earnings and revenue are expected to decline at the fastest rate since 2009. On top of that, earnings on the S&P 500 are expected to be negative until the fourth quarter of this year. When earnings decline, stock prices should decline. But that isn’t happening.
Further evidence of an overly optimistic and fearless stock market is the fact that the amount of money being invested in bearish stock market funds sits at its lowest level in more than 15 years. More and more investors accept the optimistic forecasts of analysts and, as a result, are losing sight of the growing risks in the market. (Source: “Total Assets Rydex Bear Index Fund,” StockCharts.com, last accessed April 30, 2015.)
“The blind optimism is not limited to the U.S. The Japanese stock market now trades at its highest level in 15 years. The London Stock Exchange is trading near record highs, while the Shanghai Stock Exchange is at levels not seen since 2007 and the second-highest level ever,” Lombardi adds. “When I consider investor complacency, analysts predicting higher equity prices, and reckless monetary policies of the central banks, I can’t help but be skeptical.”
“I have seen three major stock market crashes in my lifetime: the collapse of 1987, the tech bubble of 2000, and the crash of 2008/2009. They all had two things in common—outright optimism towards the stock market and a lack of fear among investors,” Lombardi concludes. “Very few analysts and economists are worried about stock prices. In fact, I’ve never seen such optimism toward stocks as what exists today. Fundamentals aside, this is very concerning.”
Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.LombardiPublishing.com.
Contact Info:
Name: Wendy Potter
Email: Send Email
Organization: Lombardi Publishing Corporation
Address: 350 5th Avenue, 59th Floor, New York, NY 10118
Phone: 905 856 2022
Website: http://lombardipublishing.com/
Release ID: 81058
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