1. Billionaires are dumping stocks
Lombardi Financial Editor John Whitefoot kept track of how investing moguls like Warren Buffett and George Soros have recently culled their holdings. In a span of two years, Buffett’s Berkshire Hathaway sold over 96 percent of its Johnson & Johnson holdings and 99 percent of the company’s interests in Kraft Foods Group, Inc. Soros did the something similar early 2014, when its Soros Fund Management dumped shares of banking titans JP Morgan, Bank of America, and Citigroup Inc.
2. Stocks are Expensive
Business Insider reports that stocks are expensive in relation to 10-year average earnings. The CAPE ratio, popularized by Robert Shiller, reveals that the S&P is currently at 27.2, around 64 percent higher than its 16.6 long-term average. These are the only three times the ratio has been higher: 1929, 2000, and 2007.
3. Record High Margin Debt
Back in April 2015, NYSE debt margin was at an historic high. In other words, the rallies in the previous months have been partly fueled by borrowed money.
4. Increased Investor Complacency
Citi’s Panic/Euphoria model is about to touch ‘euphoria,’ indicating that investor complacency is at a high. Tobias Levkovich of Citi says that the current levels of euphoria are at its highest since 2008.
5. Historical Bull Market Run
Financial Post reports that the U.K. stock market is in the midst of a 77-month long bull run. There have only been two occasions in history when the market has been on an upward trend for longer: the crash of 1929 and the popping of the dot-com bubble in early 2000s.
6. Massive Outflow of Smart Money
According to Telegraph UK, professional investors are heading for the exit. Bloomberg’s smart money flow index saw how pro investors bought stocks heavily in 2009 and onwards, enjoying historical gains for five years. In early 2014, however, that smart money trend was reversed.
With these indicators, do you think we are going through the early stages of a stock market crash? Hit the comments!
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