Melt-up before the eventual meltdown4 min read . Updated: 23 Jan 2018, 01:21 AM IST
The unfolding market scenario this year has the potential to make the eventual crash far more dangerous than the 2008 meltdown in the housing market
What is the outlook for S&P 500 in 2018? Some, like Jeremy Grantham of GMO, predict a melt-up scenario where the index ends up at somewhere between 3,400 and 3,700 points. Some investment banks strike a pose of moderation and sobriety and predict high single-digit or low double-digit returns. But most agree that the S&P stocks are expensive by most measures, with or without the inclusion of technology stocks. Of course, valuation alone was never enough to end a bull market. This market did not display the classic signs of a bubble until the last few months and, conversely, did not decline when economic growth was disappointing and the world looked like it was coming apart (China, eurozone) on a few occasions between 2012 and 2016. The absence of economic dynamism globally was reflected in the prolonged slump in commodities prices but stock prices in the US were extraordinarily resilient.
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