The long and noteworthy history of stock market bubbles is littered with a cyclical pattern of a boom, bust, big winners, and heavy losers. And the current 2021 stock bubble appears to be no different.
If anything is sure, the current stock present valuations and what comes next are unlikely to rewrite financial history. The only certainty – apart from being an improbable outlier – is that the bubble will burst eventually. They always do. History tells us it is so.
Our imperative is, therefore, to learn from history or be destined to repeat it. But is the stock bubble of 2021 a temporary blip or a more long-term phenomenon?
Smarter Team- April 8, 2021, 10:25 AM EDT SHARE ON:
In a recent review of the market’s current conditions, JPMorgan strategist Eduardo Lecubarri recaps his view that 2021 will see modest gains across stocks generally – but outperformance among the small/mid-cap sector. Lecubarri believes that investors can find opportunities for big upside among stocks in that class.
Driving the general stocks gains, Lecubarri points to recent manufacturing PMI prints, which are at 15-year high levels, and the falling unemployment numbers – both data points indicate a firm foundation for economic recovery. With consumer confidence also rising, and relatively high savings, he sees a tailwind for the small/mid-cap as the year unfolds.
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Here’s my chart for today. I’ll talk about it shortly after 3:30 p.m. Eastern (12:30 p.m. Pacific) on the Bloomberg Businessweek radio show. Also, I’ll present my Stock of the Day just after 4:05 p.m. (1:05 p.m.) on the radio and later on social media. You can hear me on Bloomberg Radio or see me at Bloomberg Global News on YouTube. Earlier charts are on my Substack page.
Favoring cheaper stocks is bound to pay off with smaller U.S. companies as it has with larger peers, according to Eduardo Lecubarri, a JPMorgan Chase & Co. equity strategist. Lecubarri recommended buying investments tied to the Russell 2000 Value Index and betting against its growth-stock counterpart in a report Thursday. The value-growth ratio closed at an almost 14-year low in August and rose just 4.6% from there through Friday, according to data compiled by Bloomberg. A comparable ratio for the Russell 1000 value and growth indexes, tracking the largest companies, climbed 12% th