Friday, February 11, 2022

"Stock Market Crash Accelerated: Brace For A Catastrophic Bubble Burst In 2022!"

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"Stock Market Crash Accelerated: 
Brace For A Catastrophic Bubble Burst In 2022!"
by Epic Economist

"The carnage continues! Wall Street is facing extreme volatility as big-name stocks face dramatic losses and declining economic trends suggest that a whole lot of turbulence is still on the horizon. Today, we brought several indicators and insights on the imminent stock market crash, so don’t forget to leave a thumbs up and subscribe to our channel so you don’t miss future videos. Wall Street has experienced a stunning rise in passive trading, a generalized fear of missing out, and a dot-com-like investor mania that has ultimately contributed to the uncontrolled growth of the stock market bubble over the past few years. Now, that superbubble has started to implode, with some big tech names going down first.

That’s what Harvard lecturer and renowned writer Vikram Mansharamani highlighted in a recent interview. The author, who became famous for spotting previous market bubbles in his book "Boombustology: Spotting Financial Bubbles Before They Burst," is warning that the current one is about to explode. “I believe a passive investing bubble has been brewing and, in fact, have started showing signs of cracking and bursting,” Mansharamani said. “We've had flows driving prices, more than fundamentals in many sectors. And part of that's being driven by just the massive amounts of money flowing into some of these indexes,” he explains.

The analyst notes that valuations have been manipulated by a fear of missing out and the “power of storytelling" by celebrity CEOs, singling out Tesla as the main example. CEO Elon Musk has a huge influence on the public and the ability to sell the idea of a "fantastic new world" and monumental future gains. Those sorts of narratives have fueled stock prices higher and higher, resulting in an unsustainable disconnect between tangible economic returns and the price with which investors value the company, he said.

Social media has only accelerated that trend. However, different from what most investors want to believe nowadays, fundamentals do matter. And as companies started to report weaker-than-expected profits in the most recent quarter, sentiment in the market has clearly started to shift, and some brutal losses have been happening each day. Tesla stocks, for instance, have crashed by 25% in a matter of days. Earlier this week, the shares of Facebook owner Meta plunged almost 30% in a single day, marking the biggest single-day drop in market value for a U.S. company ever recorded. The collapse came after the social media giant reported a dismal growth forecast.

The sizable downturn wiped out more than $200 billion from Meta’s market capitalization, and roughly $30 billion from CEO Mark Zuckerberg’s net worth, and sent shockwaves across the broader market, with the technology sector plummeting even further and the Nasdaq Composite Index deep in correction territory. Big U.S. tech companies have been under fire in 2022 as an imminent monetary policy shift spooks bullish investors since higher interest rates would erode the industry's rich valuations and inevitably set off a widespread stock price correction, threatening to crater shares with lofty valuations. The Nasdaq, which is dominated by tech and growth stocks, has been hit the hardest, losing over 10% and expecting more losses to come. That's why, many other names faced sell-offs and massive declines this week, including Netflix, Twitter, Pinterest, and Spotify.

After a week-long sell-off, all major indexes are now on the brink of bear-market territory, and if corporate earnings continue to disappoint as the Federal Reserve starts raising interest rates, they will be rapidly pushed over the edge. “It’s too early to be bullish,” Morgan Stanley’s Michael Wilson cautioned, warning the S&P could face another round of double-digit losses while pointing out the “most speculative parts” of the market have been hit the hardest, with names like Peloton crashing 75%.“Winter is here, and the damage under the surface has been enormous and even catastrophic for many individual stocks,” Wilson continued

The rapid gains and rapid losses of certain shares indicate that the bubble is struggling to hold up, and with leading stocks crashing down, a ripple effect is rapidly spreading all across the market. This financial asset bubble is global, and it includes stocks, bonds, housing, and many other assets. Given its unsustainability, and when you count everything that’s involved, a crash of catastrophic proportions is the only possible outcome to this frenetic rally. In other words, brace for a lot of pain and start strategizing before it’s too late."

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