Chris Ciovacco: If you work around or trade the financial markets, it is impossible to insulate yourself from the never-ending use of the term bubble. Barron’s, a respected and widely read financial publication, has featured the word bubble on its cover twice in the past two years.
Barry Ritholtz, the author of “Bailout Nation”, recently pointed out the historical significance of magazine covers and major stock market peaks. From Bloomberg:
In any historical asset bubble, we do not get bubble magazine covers in major news media at the height of the bubble. If anything, it’s the precise opposite. A positive story on gold on the cover on New York Times Magazine in 2011 — and GLD passing SPY as the biggest ETF — marked the top. Perhaps the most infamous was the June 2005 Time Magazine cover on “Why We Love Housing.”
The Death of Equities
As we outlined in detail on November 12, the present day facts do not support the “euphoric, everyone is in stocks” case, which aligns with the magazine cover thesis. Looking a little farther back in history,BusinessWeek declared the “Death of Equities” in a 1979 cover story.
As shown in the chart of the S&P 500 (NYSEARCA:SPY) below, the report of the demise of equities was not only premature, but stocks exceeded all expectations by soaring over the next two decades.
One of the key takeaways is when bubbles typically pop, talk of bubbles is almost nonexistent since market participants have become convinced that “stocks cannot go down” or “real estate always goes up”. In 1998, a Time magazine cover asked if the boom in stocks was over.
As you might have guessed, the answer to Time’s question was “no, the boom is not over” as equities marched higher as more and more money came off the sidelines (see chart below).(...)Click here to continue reading the original ETFDailyNews.com article: Dow Jones Industrial Average: Is The Boom Over?You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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