The Bubble is Ready to Burst, Collapses of up to 90% Expected

The Impending Stock Market Crash Predicted by Analysts

The stock market rally seems unstoppable, but five analysts predict that the bubble is ready to burst with potential crashes of up to 90%.
In 2024, the stock market has seen impressive growth, with the S&P 500 and Nasdaq reaching new all-time highs.
However, warning signs are looming: many analysts fear we are on the brink of a bubble that could burst soon, leading to significant downturns.
Concerns about a sudden correction have escalated in recent weeks, especially as stocks continue to hit record levels, driven particularly by big tech companies like Apple and Nvidia.

Analysts’ Forecasts:

1) UBS: 6 Warning Signs of a Market Bubble

UBS points out that the stock market is already showing signs of a bubble.
According to the bank, there are usually eight warning signs of a market bubble forming, and six of these have already appeared.
The strategists have highlighted signals such as increasing pressure on corporate profits, shrinking market breadth, and aggressive retail investor stock buying.

When the stock market is dominated by a few companies that account for most of the gains, it indicates weak market breadth.

UBS analysts suggest that the bubble may not burst immediately.
They compare the current situation more to the 1997 bubble than the one in 1999.
“We only invest for the bubble if we are in 1997 and not in 1999 (as we think we are),” they stated in a recent note.

2) Harry Dent: Brace for the Biggest Crash in History

Economist Harry Dent warns that stocks are trapped in what he calls the “mother of all bubbles” and could see a drastic fall.
In a recent interview with Fox Business Network, Dent predicted that the S&P 500 could plunge by as much as 86%, while the Nasdaq Composite could drop by around 92%.

Dent attributes this situation to decades of expansive monetary and fiscal policies that have inflated markets beyond sustainable levels.
He notes that this bubble has been showing signs of “overvaluation” for some time, with stocks struggling to reach new highs and the Shiller PE ratio currently at 35.

According to Dent, the duration of this bubble, about 14 years, far exceeds that of historical bubbles, which typically last between five and six years.
“The elongation of this bubble makes a more severe collapse than that seen in 2008-2009 inevitable,” Dent warned.

3) Richard Bernstein: Large Caps Could Plunge by 50%

Richard Bernstein, Chief Investment Officer of RBA, argues that large-cap stocks are significantly overvalued and appear poised for a downfall.
In a recent note, Bernstein observed that only a small group of stocks is supporting the market, and that current leaders in large-cap companies will give back most of their gains and see disappointing returns in the future.

In the worst-case scenario, Bernstein predicts that high-value stocks could plummet by 50%, resulting in losses comparable to the dot-com crash.
“This is what I think we are looking at,” Bernstein warned.
“We are in for many years of significant underperformance.”

Bernstein, however, believes that there may still be opportunities in this situation and is bullish on practically every other area of the market, except for the top seven mega-cap stocks.
This suggests that diversified investors may benefit from the current conditions.