With stocks reaching near-record highs, the industry is arguing whether we’re nearing a stock market bubble. Credit Suisse says maybe, but not quite.
Credit Suisse is of the “more room to run” mindset, but believes there’s very good potential for a bubble, reports Bloomberg. “We believe there is a 60-70% chance that a bubble could form…(but we’re) not a bubble yet,” the firm wrote in a note Thursday morning. Credit Suisse has a list of eight preconditions for an equity bubble and the current one meets barely two.
Previous multi-bull markets have lasted for an average of 18 years, and had a median real gain of 380%. If the current bull market began in 2009, with a gain of 152% over six years, it’s pretty small.
But, “the conditions for significant equity overvaluation are falling into place,” writes Credit Suisse. Excess liquidity, loose monetary policy, and retail investors still waiting to buy could all edge the market to a bubble.
Photo: Cristian Bortes via Flickr.