The US stock market is showing signs of a potential repeat of past economic downturns. Experts have raised concerns about symptoms reminiscent of not-so-distant history and are pondering their implications for the current economy.
US Market: Signs of Repetition
The US stock market is once again showing troubling signs. The historical 78% drop of the Nasdaq in 2000, when the index lost nearly its entire value, seems to be repeating. Recent adjustments, with a 13% drop in the Nasdaq, evoke past parallels. "You haven't seen anything yet," says Jim Osman, recalling the crashes of the Nasdaq, S&P 500, and Dow Jones. A shield against a similar scenario is yet to be found.
US Economy: Between Strength and Illusion
The US economy, seemingly robust on paper, has begun to show weaknesses. The S&P 500 has fallen over 10%, and company profits have reached historic highs over 9%, far exceeding norms of 3.8-7.2%. This is not so much an economy as a trampoline, analysts warn. Robert Kiyosaki has suggested that the upcoming crash might surpass the crash of 1929, but he advises to remain calm and level-headed.
New Financial Bubble or Awaiting Correction?
Investors ponder if we are witnessing the formation of a new bubble or a healthy correction? Remember, after the dot-com boom, the market recovered by 21%, only to lose another 32%. Today, the P/E ratio is again approaching 23x, a level that preceded the last two major corrections. While AI itself is not the problem, excessive investor enthusiasm is. Still, all is not hopeless, analysts assure us.
The US stock market is going through tough times. What analysts need to determine is whether past scenarios are repeating or if the economy can reach a new, stable level despite all the turmoil.
