I have written extensively about the stock market bubble, due to its magnitude, duration, and future financial and economic implications. My analyses (as this is written on February 23, 2020, with the S&P500 at 3337.75) indicate that the stock market bubble is simply enormous in size, by far the largest stock market bubble ever experienced in the United States. It may even be the largest bubble of any type in history. Of note, as I have mentioned frequently, there are many other immensely large asset bubbles currently in existence, perhaps most notably the bond market bubble
I have written extensively about the damage the “popping” or “bursting” of this current stock market bubble will cause. My analyses indicate that severe economic weakness will accompany the demise of the bubble. There are many reasons for this conclusion. One reason is that due to the exorbitant size of this stock market bubble, any significant, lasting drop in stock prices will result in a decline in many trillions of dollars in assets. Such a large decline in assets, via the (inverse) wealth effect, will have a marked economic impact in spending and confidence. As well, the stock market bubble has had many other notable direct and indirect effects. The demise of the bubble will have many other problematical impacts, including those on cost of capital and capital availability.
Also, as extensively discussed on this site, there are many current signs of economic weakness (weak economic growth or economic contraction) as well as outright (gravely) problematical economic conditions. Given such conditions, any pronounced economic or financial “shock” will have an outsized economic impact given the current economic state.
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