Do you remember what stock market conditions were like in 2006? This was a time when people were very excited about everything and anything to do with the market. It just kept rising and rising. Sound familiar? These days, optimism in the market has run amuck, and the Barclay’s CEO for one says that he feels that this market is acting much like the market did in 2006. That is a serious problem if you are the type of person who is holding shares in the market.
A few of the worrying signs that we may be right in the middle of a bubble right now are the fact that all major industries grew by twenty percent or more all around the world last year. Additionally, the stock market continues to set all-time highs day after day. Plus, volatility is near an all-time low. People are simply too excited about what is going on in the market, and some are starting to throw their money in due to a “fear of missing out” mentality.
Some wonder what happens if some of the stocks start to take a dip says CNBC. The way in which electronic trading is set up these days, it is quite possible that some of those sell orders could escalate on top of one another. Selling begets more selling and so forth. Before you know it, there is a full on panic out there on the Street.
That is the nightmare scenario of course, but it is not as though such a scenario is impossible. If anything, the very likelihood of something like this happening only increases as more people believe “that could never happen”.
Leaders from all different business industries as well as leaders of many countries around the world are meeting in Davos, Switzerland this week to discuss issues facing the planet. Economic issues are a big agenda item of course. Perhaps few care to hear the gloom and doom predictions of some, but those might be the kind of predictions that actually turn out to be the most accurate.
If this really is like 2006, then watch out when it comes to the next few years. The financial crisis started taking hold in late-2007 and into 2008. Things got really ugly by late-2008. We do not want to see a repeat of that again, but it might be on the way sooner rather than later.