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

Economy
1

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.” . . .

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

2

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

image
image564×485 47.4 KB

3

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.)

image
image788×676 93.6 KB

4

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.

image
image1154×984 53.2 KB

5

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.)

image
image900×743 94.9 KB

6

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.)
.

image
image666×435 58.4 KB

7

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?

1 Like
8

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%

9

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?

10

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.

image
image1200×800 132 KB

11

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

image
image1019×520 68.8 KB

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

12

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:”

13

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

image
image566×628 65.5 KB

14

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

image
image900×634 53.7 KB

.
.
.
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.”

15

A record

image
image934×696 89.5 KB