The Dow Jones Industrial Average has fallen 12.4% from its May highs, and Money Morning experts anticipate more volatility ahead in 2016.
stock market bubble
- How to Protect Your Money During a Stock Market Collapse
- Are We in a Tech Bubble?
- What the Media Doesn't Get About Stock Market Bubbles
- Are We in a Stock Market Bubble?
- Is This a Biotech Bubble?
- No, This Is Not a Tech Bubble - And You Can Still Profit
- An IPO Market Bubble? Not So Fast...
The tech-centric Nasdaq Composite has fallen 2.6% since July 21, leaving many investors asking us, "Are we in a tech bubble?"
On July 20, the Nasdaq hit a record high of 5,231.94. Then, investors started worrying that tech stocks had become overvalued, and the downward pressure on the index began.
Since the last bona fide financial bubble, the real estate and credit bubble of 2007 to 2009, it seems like every time anyone pays a few pennies too much for a stock, there is a flock of analysts ready to start crowing "bubble!" like so many birds on a wire.
I believe that any pundit who calls a sector or market a "bubble" when they really mean "fundamentally or technically overbought" should be banished from pontificating until the real bubble appears.
Are we in a stock market bubble?
Nobel Laureate and Yale professor of economics Robert Shiller told Goldman Sachs "there is a stock bubble element in what we see."
Wall Street pundits are claiming we are on the precipice of a biotech bubble because biotechnology stocks have been soaring. The Nasdaq Biotechnology Index has climbed 44% in the last year. The Nasdaq Composite and S&P 500 have climbed just 9% and 11% in the same time.
But it's the last week that has traders panicked about "bubble" territory.
From March 20 through March 26, the Nasdaq biotech index dipped 7%. The S&P biotech index dropped almost 11%.
The bears are out in full force trumpeting the news that there's a tech bubble, and the steep decline has started.
As of today's opening, the Nasdaq Composite has dropped 7.3% in just over three weeks. That drop followed an incredible run where the index climbed 28% from September 2013 through September 2014.
But according to Money Morning experts, this is unequivocally not a tech bubble.
This year has seen the busiest U.S. IPO market since 2007, with 199 companies already going public.
Their performance has investors fearing we've hit IPO market bubble territory.
Of the year's 199 IPOs, 23% priced above their initial IPO ranges.
Through the first two weeks of November, 16 companies have doubled their initial public offering price. Six companies doubled their IPO price on the first day of trading alone.