According to Peter Boockvar, the chief investment officer of Bleakly Investment Group (CIO), there is a massive stock correction coming up our way because many popular stocks have reached impressive peaks as a result of speculative trading. According to Peter, this is not happening for the first time and is the result of a phenomenon called the late-cycle market.
He adds that the stocks of companies like Tesla, Virgin Galactic Holdings, and Plug Power have been soaring high, and it is totally because of speculative trading instead of fundamentals and the underlying value.
Bitcoin prices pumped by speculative trading
With all the speculating and rallying going on, Peter explains that this doesn’t imply that the cycle is going to end very soon. Looking at the prices of Bitcoin, which is completely based on speculative trading by people, there’s a chance that this late-market cycle continues for a considerable time.
Boockvar’s views were supported by the CEO and CIO of Richard Bernstein Advisors, Richard Bernstein. He warns that speculative trading gains popularity when the market growth is slow. If we look at the GDP figures, it has been under par for 3 quarters now. The yield curve has started inverting now and despite all of this, TSLA and SPCE are going up, which is indeed very strange.
Tesla, Virgin Galactic, and Plug Power massive gains this year
People that have invested in Tesla, Virgin Galactic, and Plug Power have made massive gains this year, sometimes by even 200%. This kind rise only happens when there is massive speculation going on and as a result, a correction will come.
Boockvar pointed out to a Reddit group, r/wallstreetbets which encouraged the investors to look up and buy the stocks and thereby pumping their prices that are completely unjustified if we look at the fundamentals. This is a huge warning sign for a reversal in the stock market.
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