Investing.com: Goldman Sachs speculative trading indicator hits record high (as stock market hits new high too,)

Economy
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Goldman Sachs speculative trading indicator hits record high

Investing.com – Goldman Sachs said in a note Friday that its Speculative Trading Indicator has surged to historic levels, reaching its highest reading outside of the dot-com and pandemic-era bubbles.

“Our Speculative Trading Indicator has increased sharply during the last few months,” Goldman Sachs wrote, noting the current level is now the highest on record apart from 1998–2001 and 2020–2021.

The rise is being driven by “elevated recent share of trading volumes in unprofitable stocks, penny stocks, and stocks with elevated EV/sales multiples.” . . .

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Over-speculation does not always end in a crash.
But crashes don’t happen any other way

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Here it is visually.

In recent history (~25 years)this has happened twice.
Each time the market bounced around a little,
Each time one of those bounces ended in a crash

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Another thing that is not a definite indicator is when I turn bearish.
Silly me, I was part of a large crowd who turned bearish way back here
(and missed a lot of opportunity.)

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This is world stocks not just the US bu,t umm . . , it si a strong signal that stocks are overpriced and a crash is more likely than normal.

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Hmm
it looks like almost all the current market surge is related to
(caused by??) an increase in buying stocks on margin.

(There is no similar correlation of earnings or assets to current stock price so they are notthe likely drivers.)

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The S&P 500 is now trading at over 3.2x sales, its highest valuation this century (and, I am told, in all in history.)
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Not very encouraging charts. Are we entering the phase before the crash when it is a common topic in the press and among general public that a hard correction is coming?

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A crash is possible.
So is a lost decade.

If you were100% in tech, you experienced the last lost decade as two major crashes >50%

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I don’t work in the industry anymore. The last crashes were grounded in a tech bubble and a real estate/mortgage bubble. Is there a specific industry sector that stands out to you, or more just a broad over pricing of securities in general?

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The Mag 7 comes to mind, although at the moment it si the MAG 5.

As far as lost decades go, this chart is a little dated, but useful for our purposes.
Lost decades happen a lot.
They are very choppy, not flat sideways.

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This is the tech-heavy NasDAQ 100 during the dot.com bust.

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It reminds me, even without an up day,
a stock can fall 50% again and again and again an unlimited number of times.

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Then again, are really in a bubble if most of the market isn’t even rising much?

Via Twitter:
“US Big Tech is responsible for 80% of the 4.2% gain in $SPX for Q2. $NVDA & $AAPL make up 1/2 half of that. :smiling_face_with_sunglasses:”

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Yeah how cna it be a market-wide bubble?
Just a small number of stocks are rising like crazy.

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No problem.
as long as semiconductors become 12% of the economy and remain 12% of the US economy forever
then . . . no problem

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12% is equivlent to all

  • Arts,
  • Entertainment,
  • Recreation,
  • Accommodation
  • Food Services
  • Contruction
  • Mining, and
  • Agriculture combined.

do you know anyone who spends 12% of his yearlyincome on the semiconductor portion of his computer?

“Ahh yes I make $60,000 so last year, this year next year and every year I spend $7,200 just on the chips in my computer.”

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A record

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Record high valuations.

How much do you want to pay today for $100 in future earnings?
a. $10
b. $20
c. $100
d. The most ever paid in all history. I love paying large amounts of money. I hate money and can’t get rid of it fast enough.

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Oh. I guess I was wrong.
We’re safe now.

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its certainly a bubble, i’m heavily weighted in tech but am ready for an exit point at any time.

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I don’t give investment advice, but hypothetically:

Would you be comfortable if
for the next 24 months
you were guaranteed to make (only) 4%/year
but you won’t lose anything and
you would miss out on all the stock market gains?

I guarantee if you do, you will be sitting on the sidelines and at least one of your stocks will have gone up big.

Would you be comfortable with that?

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Let me rephrase my above post:
What signal are you waiting for?

If your stock rises 10% tomorrow is that an exit point?
If it falls 10% tomorrow is that an exit point?

(I am not telling you what your terms should be. I am asking what yours are.)