The stock market has been breaking records over the last year while the real economy has struggled in the face of the pandemic. And that discrepancy is starting to make experts a little nervous…
One expert, Suze Orman, would go so far as to say she’s now preparing for an inevitable crash.
And a famous measurement popularized by Warren Buffett — known as the Buffet Indicator — shows Orman might be onto something.
Here’s an explanation of where the concern is coming from and some techniques you can use to keep your investment portfolio growing even if the market goes south.
What does Suze Orman think?
Suze Orman has been avidly watching the market for decades now. She knows ups and downs are to be expected, but what she’s seeing happen with investment fads like GameStop has her concerned.
“I don’t like what I see happening in the market right now,” Orman said in a video for CNBC. “The economy has been horrible, but the stock market has been going.”
While investing is as easy now as using a smartphone app, Orman is concerned about where we can go from these record highs.
And even with stimulus checks, which are still going out, and the real estate market breaking its own records last year, Orman worries about what will come with the coronavirus — especially as new variants continue to pop up.
And given how long the market has been surging, she feels it’s just been too long since the last crash to stay this high much longer.
“This reminds me of 2000 all over again,” Orman says.
The Buffett Indicator
One metric Warren Buffett uses to assess the market so regularly that it’s been named after him has been flashing red for long enough that market watchers are starting to wonder if it’s an outdated tool.
But the Buffett Indicator, which is a measurement of the ratio of the stock market’s total value against U.S. economic output, continues to climb to previously unseen levels.
And those in the know are wondering if it’s a sign that we’re about to see a hard fall.
Even Tesla boss Elon Musk is starting to feel anxious. Musk recently asked investing bigwig Cathie Wood, CEO of Ark Invest, if we should be expecting a crash.
While Wood initially brushed off any concerns, she did tell Musk she…
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