The problem, which Dimon called a "hockey stick" due to the increase in debt and the expenditures to sustain it, will not be limited to the United States, as Taleb reinforced Dimon's warning.
We need an outside force, or perhaps a miracle," Taleb replied when asked how the problem could be solved. "Honestly, this makes me feel pessimistic about our whole Western political system."
Tragically, Taleb shared his audience's pessimism about the stock market. Similar to other bears on Wall Street, he cautioned that analysts are becoming blind to the proper way to assess firms, exaggerating their worth beyond what they actually produce.
Look, you could get a handle on price per earnings in the last 20 years, but now it's all over the place," the professor from New York University remarked. Our inability to assign monetary values to businesses is a historical and contemporary quirk. Creating tales and stories about the future is a common way to generate funds for selling to others.
Count the number of venture capitalists who became filthy rich off of doomed businesses. At the conclusion of the supper, someone was left with the bill. This exemplifies my point on these irrational corporate values.
For a while now, Morgan Stanley's Mike Wilson has been sounding the over-valuation alarm. The S&P 500 entered the "death zone" in February of last year, according to the chief investment officer. This is a phrase used by mountaineers to describe the highest point at which human life is no longer supported by the oxygen levels in the air.
Wilson stated, as reported by MarketWatch, that investors have "either by choice or out of necessity" followed stock prices to "dizzying heights once again" because liquidity (bottled oxygen) gives them the ability to rise into a zone they shouldn't and cannot dwell for long. Assuming they can advance without disastrous repercussions, they climb in quest of the ultimate topping out of avarice. However, oxygen levels drop and harm comes to those who choose to disregard the dangers.
The view of other experts is more optimistic. According to Fortune's sources, the Magnificent 7 stocks—Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla—will continue to support the market for the foreseeable future, even if some of the largest American corporations are facing uncertainty.
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