Evidence is building of a Wall Street investment ‘bubble’ with implications for Australia
It’s widely accepted the US stock market, AKA Wall Street, is currently overpriced or overvalued.
That means the benchmark S&P500 index (which tracks the ups and downs of a basket or portfolio of hundreds of America’s biggest companies) is potentially due for a drop in value, or a fall.
The multi-trillion-dollar question is whether the drop will be shallow or deep?
If the drop, for example, results in what traders call a “correction”, where stocks drop 10 per cent or more from their recent peak, it will cause considerable pain. Most, however, would view that as necessary pain to sustain a long-term upward trend in stock values.
