Huge stock market bubble forming with an inevitable 60% plunge, strategist warns

The “everything rally” that has engulfed Wall Street is a classic asset bubble just waiting to burst sometime in 2020, CEO of AdvisorShares Noah Hamman told Yahoo Finance.

“It will continue on for a while for as long as we see we have an indication that we could have lower rates ahead, though possibly with a pause, but with an increasing Fed balance sheet,” he said.

The “everything rally” refers to assets of all kinds that have been in major rally mode. Hype has risen among investors, thanks to the US Federal Reserve’s rate cuts throughout 2019 and the signing of a phase one trade deal between the US and China.

According to Hamman, the Fed’s actions were “driving up prices everywhere.” He warned that if the Fed signals a change in interest rate policy by mid-2020, the bubble could explode.

“It could be a huge bubble, and we could see huge declines — 50 percent and 60 percent declines that happen quickly before you have a chance to react to them,” said the strategist, recommending that investors stay long in the market until then.

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