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Michael Gade has warned that the stock market is perfectly poised for a sharp correction.
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The portfolio manager pointed to three warning signs flashing in the market.
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“I think we are all still in a difficult situation,” Gade wrote. “All bubbles end.”
The market appears to be “perfectly poised” for investor panic and a coming stock market crash, according to one of Wall Street's most bearish fund managers.
Michael Gade, portfolio manager at Tidal Financial and author of the Lead Lag Report, says there are several warning signs flashing in the market that put stocks at risk of a major correction. warned that there was a possibility of
In an op-ed for Investor Place on Thursday, Gade pointed to rising prices for gold, utilities and long-term government bonds. When markets start to deteriorate, investors typically flock to these three assets for safety.
“It is unusual for these three traditionally defensive asset classes to move in such harmony, and historically these types of moves have been a precursor to broader market changes,” Gade said. Stated. “What's important here is a concerted move in the defensive asset class, and the fact that it's happening in the middle of a speculative trading bubble screams that something might be about to break. Be on guard. want.”
Gade, like other Wall Street bears who say the hype around artificial intelligence is overdone and bound to end badly, has been warning for months of a massive bubble forming in the stock market. . In a note earlier this year, top economist David Rosenberg pointed to the dominance of mega-cap tech stocks in the S&P 500 and warned that stock prices are now similar to what they were before the dot-com market and the 2008 market crash. did.
Gade has not set an official price target for this year, but he warned investors to prepare for a potential stock market crash.
In a February op-ed, Gade wrote, “How can this be so bullish when literally the entire world is rooting for the widening wealth gap between mega-cap tech stocks and almost every other publicly traded company?” It's the market price,” he said. “I still think we all face many challenges. Time will prove my original analysis (mostly) correct. All bubbles are over. Masu.”
However, investors appear to be seeing less downside risk, and with expectations for a soft landing and a Fed rate cut later this year, investors remain fairly optimistic about the market. There is.
More than 50% of investors are bullish on stocks over the next six months, according to AAII's latest investor sentiment survey. Meanwhile, more than 81% of individual investors say they believe the Dow will end the year on a higher note, according to a survey maintained by the Yale School of Management, the most investors have seen in the market since 2007. This suggests that they are optimistic about the future.
Read the original article on Business Insider
