Stock Market Bubble: Media's Contradictory Narrative and Metrics

The stock market is in a massive bubble, but mainstream media claims a low probability of a crash.

### Market Watch: Bizarre Double-Speak on the Stock Market Bubble
* 📈 Mainstream media acknowledges that the stock market is in a **massive bubble**, comparing it to historical bubbles like the **dot-com bust**, the **GFC**, and **1929**.
* 🛑 However, they claim that it's not likely to end with a crash but rather a slow deflation, with the **probability of a crash being below average**.
* 🧐 The "Buffett indicator" (market value to GDP ratio) is close to an **all-time high**, but they argue that even in times when the market was fairly valued, the probability of a **crash was lower**.
* 📊 According to a forecast by State Street Associates based on Harvard research, the probability of a **40% decline in the next two years** is **18% lower** than the **5-year average forecast**.
* 📉 The forecast model suggests that when the trailing two-year price run-up of the market is **100%**, the probability of a crash is **close to 50%**, and at **150%**, a crash is **nearly certain**.
* ❓ By historical standards, the model's predictions seem flawed. For example, major market crashes like 1974 and 1987 did not meet the criteria of a **100% or 150% increase**.
* 🤔 The model's logic is questioned due to its inconsistency with historical crashes, leading to **doubts about its validity**.
* 💬 Despite the bubble warning, the article suggests **continuing to buy stocks**, creating a confusing and contradictory narrative.

hello full of Robo capitals hope you're well. So the mainstream media is coming out and admitting that the stock market is in a massive bubble, but you won't believe how they're spinning this. Let's get right into this article from Market Watch and be prepared my friend, hope you're sitting down for this one. Yes, we are in a stock market bubble. So that's a big change of the narrative, that's a stretch for the mainstream media to even admit that. But they say no, it's not likely to end with a crash. So yes, we're in this massive bubble. It's just like what we saw on the dot-com bust. It's just like what we saw in the GFC. It's like what we saw, let's just say, in 1974. It's just a massive, massive bubble like we saw in 1929 maybe. But even though every single time it ended in a crash, this time is different. And this is what they're trying to get you to believe. Check this.

out, and what's really shocking is the evidence that they give for their position. In this case, Market Watch. This's a guy named Mark Hbert so stocks down 40% would pop this market bubble. Okay, that's I could have figured that one out, but slow deflation is more likely than a quick crash. By the way, when have we had a slow deflation, a just a very slow grind down, nothing to see here, no big deal when when, and by the way, down 40%. When have we seen that when the stock market was in a bubble that it just gradually comes down? This is just like inflation or this is just like uh the FED fighting inflation or the FED raising interest rates. When have they ever orchestrated or engineered a soft landing? Never. So why is that our base case right now? This is what I ask the mainstream media. And why is it that your base case is that it's just a gradual decline, just a gr like there's you don't even notice like we'll be down

40%, but you won't even, it'll just be like nothing. By the way, how could stocks be down by 40% and how could that not impact an already shaky economy. Let's get into the article here. So they say the probability of the US Stock Market crashing is below average right now. How is this possible, I wonder if they ever read the article after they wrote it. It's like I'm sure you've got some of those friends that just a lot of times they don't make any sense and you're like literally asking yourself, I wonder if that person actually hears the words that are coming out of their mouth. There's just, there's no way. Look at this, they're saying we are in a massive stock market bubble but somehow the probability of the US Stock Market crashing is below average. So not below average in other times where there was a bubble but just below average, period. So if we use the Buffet indicator as an example and we, I think that is at what now, let me actually look that.

up. So, Buffett indicator here. So, the Buffett indicator right now. Whoa, whoa, whoa, whoa, whoa, whoa, what's happening? Let's see if this is more straightforward. Yes, I know what it is. Okay. So, look at the Buffett indicator right now. So, it's very close to an all-time high. So, this is GDP versus market cap of the S&P 500 or the Dow, the US Stock Market. Okay, we'll assume it's the Dow, but the bottom line here is we are close to an all-time high. So, what this person is saying is when you look at even times when the PE ratios were below 15 or when the Buffett indicator was just kind of right in the middle here. So, right now it's almost 200%, so it's 188.18% ratio market value to GDP 53% higher than the long-term trend. So, here's the historic trend, this dotted line. So, what they're saying is even when you look at this historic trend, the probabilities of a crash right

now are below average even at times when the market was fairly valued. Even times when the market was, let's say, at 12. I'm talking about the PE Ratio was at 12. Or now we're what, 22, 25, something like that. And even at times when the Buffet indicator would signal that the stock market is fairly valued. Even when you look at those times, we are still at a lower probability of a stock market crash now than then. I again, how can you say this with a straight F? That doesn't even make sense. Huh. This is according to the froth forecast compiled by Street State Street Associates, which are based on research by Harvard. Oh, there you go, Harvard University. Okay, I should have looked at that as soon whenever you see an Ivy League school, just completely ignore anything past that statement because it's all just going to be economic drill. The probability of a 40% decline at some point over the next two years. Okay, the operational definition of a crash that they use, they're saying now it's

18% lower than the trailing 5-year average forecast probability of 26%. So then the question becomes, okay, how are they coming to this conclusion? Look right here. They say that when the trailing two-year price run-up of the market is 100% – excuse me, when the trailing 2-year price run-up, yes, is 100%. 100%. For example, the probability of a subsequent crash is close to 50%. When the trailing price run-up is 150%, then a crash is nearly certain. So what this leads you to believe, and they say right now we've had a run-up of basically 50%, that's what they're showing here. So what this leads you to believe is, oh well, hey look, this is in a bubble, but let's just bye bye bye bye bye like Jim Cramer teaches us, because it doesn't matter, because the probability is so low that the stock market crashes that I might as well load up, even though at the exact same time they're saying that they see a stock.

market decline of 40%. Oh, but it's just going to happen so smoothly and softly that it's not even going to impact your portfolio. Oh man, so anyway, getting back to their, we'll call it rationale, you would assume that they've gone back throughout Market crashes in history with the United States, and it shows that, wow, 1974, wow, doc, wow, GFC, wow, all these times the market really ran up the prior two years and then it crashed. But if we actually go to the S&P 500, which I thought I had that up, let's look at market trends. That one's really easy to see, and we're going to go ahead and do nominal. Well, let's look at a log chart there. Actually, let's do this. Let's just take off the log chart, but we're going to zoom in here a bit so we can see specific time periods. So let's start looking at the 1970s because as you guys know from watching my videos, we had a huge stock market crash right here going into

1974. In fact, think about this. This was a time of very high inflation, obviously. And these are nominal, nominal numbers. So think about how much you would have lost when you adjust for the rate of inflation as far as your purchasing power. So right here, we're at 118. Okay. And the stock, this is by any definition, this is a massive stock market crash when it's basically down by 50% in nominal terms. So in real terms, you're down much more than that. So based on this guy's what he's saying, you would expect that, Oh, well then the market must have been up by at least 100% the last two years or the two years prior. Okay. This was 1972. So let's go back to even 1970, you know, at the depths of the last downturn. And you're at 72. But we're at 118. So the increase wasn't even 100%. So I, I realize that they're not saying that you have to have 100% and 150%, but if those are the metrics.

they're using well then you would assume that we would have seen something like that in the United States stock market in the past well maybe we have let's go over to uh Black Monday shoot over to 19 87 boom I think most people would consider that a stock market crash see how one day it goes down by what 20 25% something like that maybe even more it went down by more than 25% went down by Boy almost 100 so probably call it 30% something like that okay but uh here again you would assume that well this has got to be I mean this was obvious right so this would have been one of those times where it was up by 150% and then like they're saying there's a 100% chance that that sucker's coming down but it starts at 329 before it rolls over so then let's go back to 1985 and here we are we're right around 200 so 200 excuse me so 200 in 1985 October and we fast forward

to 1987. And we're at 329. Wait a minute, that's not a 100% increase, let alone 150% increase. But yet, by their own metrics, they would have said there's a very low probability that we have a stock market crash here. Why? Because the stock market wasn't even up 100%. The stock market, let's just say, 200. Let's say it was up 80%. So they would have said, Nope, nope, nope, low probability, low probability. Remember, the stock market, they admit, was up 50%. So if you look at some of the, let's go to the dot, maybe that was up 150%, definitely a stock market crash. But again, we start here at, let's say, 1500. So let's go back two years to 98. And we're at, I mean, call it, I guess it dipped super low, but I mean, they're, I don't know that they're referencing the low point of the past two years. So let's just say it's at 1000. And we go up to

1500. So that's an increase, not of 100%, not of 150%, but an increase of what, 50%, which is the exact same increase that we've had over the past two years. So they would have told you, using their method, if you want to even call it that, the probability of a stock market crash in August of 2000 was also extremely low. In fact, they would have said it was below average. Let's go to the GFC. I can do this all day long. So again, no one, the stock market, absolutely, this was a mega crash. And we peak out here, let's say right around 1500. Once again. And let's go back two years, we're at 1,200. We're at 1,200. So this wasn't even an increase of 50%, this was an increase of, let's say, 35%. So if they're giving an 18% chance of a stock market crash now due to the fact that we're up 50% over the last two years during just before the GFC, they

would have given that like a 3% probability. So, I don't know how they can put any weight whatsoever in this model. How can they look at this and say, Yeah, this is something that you should actually factor into your decision-making process. I mean, this is just pure garbage, but this is what they're trying to get you to buy into. It's like bizarre double speak. It's almost like Orwellian that they're sitting there telling you the stock market's in a bubble, but don't worry about it because it's not going to crash. But our methods are, pardon my French, dog. And you guys know in accounting, dog in, dog out, as I always say. But even though that's the case here, somehow this means that you should continue to buy the stock market. I mean, it just, it's not even coherent, really. And then they give some other example as to, you know, cap weighted is just because we're in the mag 7, just basically because we're the stock market is held.

up by Nvidia. That doesn't mean that there's any more of a risk that the stock market crashes again. How you square that Circle, I'll never know. Ah, geez, but there you go. Bye, bye, bye, bye, bye. And let me be very clear that you've got to. I've been saying on this channel. One of the things that I've learned over the last couple months is it doesn't matter what you think. Like, I think the stock work's in a massive bubble. I'm sure most of you on this live stream think the exact same thing. But if you're setting up your portfolio or if you're making shorter-term bets, if you're a trader, let's say, it doesn't matter what you think. It only matters what the market thinks. And that's how you have to position yourself. So in my personal portfolio that I have with Rebel capitalist Pro, one of my model portfolios is a little more aggressive. I have bets in there that probably surprise a lot of people, but they're not based on my opinion.

can assure you of that they're based on my opinion of what I think. The market thinks and that's it. Sounds bizarre. It sounds weird. But I think especially if you're betting short term and trading as counterintuitive as that may seem. It's what you got to do. So enjoy the rest of your afternoon guys. As always make sure that you're standing it for freedom, liberty, free market capitalism. And remember the stock market is in a massive, massive bubble. But it's not something that you should worry about at all. In fact, don't change your position size like Jim Cramer says. Bye bye bye bye bye. You got nothing to worry about. All right guys, we'll see you in the next video.

You Won't Believe What They're Saying About The Stock Market Now

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The Mainstream Media's Take on the Stock Market Bubble

The mainstream media is acknowledging the current stock market bubble but is downplaying the likelihood of it ending in a crash, which goes against historical patterns.

They are suggesting that a slow deflation is more probable than a quick crash, despite the lack of precedent for this type of soft landing.

Additionally, the media is claiming that the probability of a US stock market crash is below average, contradicting the assessment of the market being in a massive bubble.

The Current State of the Buffett Indicator

The Buffett indicator, which compares the GDP to the stock market's value, is currently close to an all-time high at 188.

Despite the market being considered overvalued with a high PE ratio, the probability of a stock market crash is lower than during times of lower valuation, according to a forecast by Harvard University.

The forecast is based on the market's trailing two-year price run-up, which, despite indicating a potential market bubble, suggests a low probability of a crash.

The speaker discusses the impact of market crashes in history, particularly focusing on the 1974 crash and its high inflation.

They emphasize the significant nominal and real terms loss during this crash, questioning the correlation with the previous years' market performance, which showed an increase of less than 100%.

Inconsistent Stock Market Crash Predictions

The United States stock market crash in 1987 contradicts typical crash indicators, with a much lower percentage increase before the crash.

Despite the significant drop, the crash defied the usual prediction models based on percentage increases.

The inconsistency in crash prediction models raises questions about their reliability and effectiveness.

Critique of Stock Market Crash Probability Prediction

The speaker criticizes a method for predicting stock market crashes based on percentage increases, arguing that it is unreliable.

They use historical data to show how the method's predictions would have been significantly off base.

The speaker finds the idea of relying on this method for decision-making to be absurd and incoherent, likening it to "pure garbage.

The Importance of Market Perception in Stock Trading

Market perception, not personal opinion, is crucial when making trading decisions, according to a financial expert.

The expert emphasizes the need to align with the market's view, even if it seems counterintuitive.

Despite the belief that the stock market is in a bubble, the expert advises against worrying and changing positions.