You cannot Correct Stock and Bond Markets without Crashing the Pension and Insurance Systems | by Ryan Gosha | The Capital | Feb, 2021

 

The stock market is overvalued. The bond market is overvalued too. All the indicators are screaming overvalued.

The Buffet Indicator is yelling overvalued, overvalued.

Buffet Indicator measuring Market Cap-to-GDP ratio

Stocks are way beyond the overvaluation levels witnessed during the 2000 dot-com bubble.

Debt is at an all-time high.

Global debt at 281 trillion, some estimates claim it’s 300 trillion.

It is understandable that all these metrics have gone up due to the market interventions by governments and central banks to stem the effects of the pandemic.

People are worried about these valuation levels and debt metrics. Everyone can see that markets are due for a correction and that the growth in debt needs to slow down.

Fundamentalists are calling for central banks and governments to slow down on the money printing and stimulus packages as they drive financial markets deeper into overvalued territory.

Whilst that is theoretically the right call, the right thing to do, many do not…


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