Bank of America says growth stocks are in a bubble exceeding the 'dot-com' and 'nifty fifty' eras

[Cattledog]

— and warns they could take the S&P 500 down 40%.

If you listen closely enough, amid all the investors cheering on AI, echoes of some of the great bubbles in history are starting to reverberate through the narrow canyon of skyscrapers on Wall Street.

That's the warning Bank of America strategists issued to clients in a note earlier this week.

As investors continue to pile into growth stocks, sometimes passively, the market has started to resemble the so-called "Nifty Fifty" and "dot-com" bubbles in the 1960s and late 1990s, respectively, the bank said. And while stocks could still rise in the near-term, outcomes after those famous bubble periods suggest trouble could be coming.

https://www.businessinsider.com/stock-market-crash-growth-bubble-ai-dotcom-nifty-fifty-sp500-2025-2

[SunSeeker]

1. Warren Buffett agrees. He is getting out of stocks.

It surely says nothing cheerful that Warren Buffett, the world’s most famous and successful investor, now holds more than half of his company’s net assets in cash and Treasury bills.
...
Or that the legendary chairman of the Berkshire Hathaway conglomerate now has more in cash than he does in traded U.S. stocks.

Buffett’s retreat from the U.S. stock market comes as U.S. stocks have hit record levels and valuations. By the metric known as the “Buffett indicator,” which compares the value of the U.S stock market with the size of the country’s annual gross domestic product, shares have never been as expensive as they are now.

https://www.marketwatch.com/story/warren-buffett-warning-of-scoundrels-and-fiscal-folly-slashes-his-exposure-to-u-s-stocks-15c6e66a?link=sfmw_fb&fbclid=IwZXh0bgNhZW0CMTEAAR3qVYFDVp0xIrTZV7aYxldXEDx1PD4ZLnnRoBJaD0DKVq9bc1vfH3onOlM_aem_roJeNUyb6LYV1nt06pCLGw

[Aussie105]

2. Fair enough.

S&P down 40%, Australian stocks down 20%, my retirement fund down 10%

Have had this unsettling feeling for a while - things were too good, stocks going up too fast, too much hot air, and the bubble would burst at some stage.

Not unexpected, in other words.

[Martin Eden]

3. On Friday I transferred my 401k funds to an IRA

My savings were already taking a hit from the stock market, which looks like it will only continue to get worse.

[bucolic_frolic]

4. Today's bubble has the advantage of 15 years QE1-2-3, Operation Twist, CARES Act, STIM,

Infrastructure, CHIPS and Science Act, and more along the way.

We invested in growth, and took on a lot of debt to do it.

Stocks are going up because there is growth, and because there is so much money around. The currency is somewhat devalued because of all this, so stocks are being repriced as investors figure out where to put their money.

The only risk to the bubble is if the money supply stops growing. And it will, when we cannot, or are unwilling, to repay the interest on the debt. That interest is something like $800 billion a year. That's what all the hubbub over the budget is about these days.