Those of you who are a little older will certainly remember the events on the stock exchange in 2000 vividly. In Germany, it was all about Telekom and the Neuer Markt, and in the USA, the NASDAQ set the tone. While the Telekom share is currently still around 85% below its then high level and the Neuer Markt has long been abolished, the NASDAQ is experiencing similar absurd excesses today as it did back then.
Like in 2000
Compared to the year 2000, however, the real economic situation is much worse today and the state and corporate debt is much higher. Still, the fundamental valuation of the US stock market today exceeds the absurd overvaluation reached in March 2000, at the height of the tech bubble, just before the NASDAQ index fell 83% for two and a half years.
Euphoric speculation on credit and with options
The particularly risky speculation on credit also peaked in March 2000, when securities lending amounted to 2.8% of gross domestic product. Now this speculation metric has risen to a new record of 3.1% – and with it the wave of forced sales that will inevitably be triggered the next time the stock market goes downhill.
Buying stock options is even more speculative than stock trading on credit. They become worthless if the corresponding stock does not rise significantly within a relatively short period of time. Sales in this market segment have shot up in the past few weeks. The purchases of fewer than 10 options contracts categorized by the stock exchange as small speculators are now for the first time at the same level as in 2000.
Now the mother of all central banks warns
These are just a few of the typical harbingers of an imminent bear market, in the course of which the S&P 500 is very likely to at least third. The current quarterly report of the BIS, the Bank for International Settlements, shows very clearly that this risk is very realistic. This mother of all central banks warns urgently of overheated stock and bond markets with uncertain economic and economic prospects at the same time.
But as in real life, it seems that the children do not want to hear the mother’s warnings. Only one thing is different: the central banks will not have painful experiences if they fall on the nose with their dubious policies, but you, dear investors, savers and taxpayers. You can read more about the extremely remarkable and significant events on the world’s leading stock exchange in the January edition of my stock market letter Crisis-proof Investing, which will be published on Tuesday.
Great opportunities with precious metal stocks …
While the vast majority of the US stock market, and the tech sector in particular, appears to be in the final stages of a speculative bubble even bigger than it was in 2000, there are also a few niches that are undervalued and look extremely attractive in many ways.
In the first place here are the gold and silver mining stocks. Here my price range indicator recently gave a new buy signal. It thus signals a rise in the gold price to new highs. Take advantage of this with selected mining stocks.
… and now also in the energy sector
In second place, companies in the traditional energy sector are now increasingly coming into my analytical focus. The sector is attractively valued and just as unpopular at the moment as the precious metals sector was when gold was below $ 1,200 an ounce. That is why Roland Leuschel and I deal with our new thematic focus issue, which will also be published on December 15, 2020, with the developments in the energy sector and the great opportunities it has in store for you.
Don’t miss out on these important analytics and stock recommendations. They are the cornerstone for a successful 2021! Order my crisis-proof investing stock market letter today – 30 days free of charge.
I wish you a nice weekend,
Claus Vogt, Editor-in-Chief of Crisis-Safe Investing
P.S .: As was the case last in 2000, there is again an IPO boom in the USA that is absurd. Protect yourself.
P.P.S .: If you want to get through this crisis week after week and find out at an early stage which investments are still worthwhile, please ask for the free Claus Vogt market commentary today hereeasily with your email at.
PERSONAL-FINANCIAL.COM publishes analyzes, columns and news from various sources in this section.
PERSONAL-FINANCIAL.COM AG is not responsible for content that is recognizable by third parties in the “News” area
This website has been discontinued and does not adopt it as its own. These contents are in particular through
a corresponding “from” mark below the article heading and / or through the link
“To read the full article, please click here.” responsible for
this content is solely the named third party.