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Ron Insana: 'Bubble Boys' Are Wrong About This Stock Market Rally

Ron Insana: 'Bubble Boys' Are Wrong About This Stock Market Rally

(Dollar Photo Club)

By    |   Friday, 12 August 2016 09:46 AM

 

CNBC’s Ron Insana says all the pundit predictions of a looming stock market crash are just wrong.


“I am not in the bubble camp, but I am growing more cautious about the state of the stock market,” he wrote for CNBC.com.

“Of course, the bears have suggested for years that this market is due for a serious decline. And we have had several corrections since this bull market began on March 9, 2009,” he said.
 

While he admits the market’s value may be “stretched,” he doesn’t see a looming crisis. “The signs that flashed red before the last crisis are, at best, flashing yellow right now,” he said.

And while Goldman Sachs recently told clients to stay away from stocks for the next three months, such advice is really “a trading tactic, not an investment strategy,” he said.


“There are other issues to be concerned about regarding the financial markets. Certain credit spreads have widened, indicating signs of strain in the global financial system.

British and European interest rates, Tuesday, fell to record lows. That is also indicative of weak growth overseas and a potential negative for future profit growth here at home,” he explained.

“European banks are under duress. Japan, China, Russia, Saudi Arabia, Brazil and Venezuela have varying degrees of economic distress,” he said.


But for the most part, the U.S. looks to be on solid economic footing, for now.

“Walt Disney looks good again. And other strong, brand name franchises remain solid long-term investments,” he said. “Things can change. If the Fed raises rates persistently in the months ahead, we will quickly find out if there are system strains in the market.”

However, not all market pundits agree with Insana.

For example, famed market bear Marc Faber, the editor and publisher of the Gloom, Boom & Doom Report, told CNBC that stocks are likely to endure a gut-wrenching drop that would rival the greatest crashes in stock market history.

"I think we can easily give back five years of capital gains, which would take the market down to around 1,100," Faber said, referring to a level 50 percent below Monday's closing on the S&P 500.


When pressed on what could cause the decline he predicts, Faber responded that "you never know exactly why this will happen," adding that he believes the market's gains are unsustainable.

"The fact is, the market hasn't really been driven by genuine buying, but by stock buybacks, takeovers and acquisitions, and market leadership has been narrowing. It's not that many stocks that have been making new highs. It's quite a narrow growth of stocks that have been very strong," he said.  

 

(Newsmax wire services contributed to this report). 

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CNBC's Ron Insana says all the pundit predictions of a looming stock market crash are just wrong.
ron insana, stock market, bubble, investors
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2016-46-12
Friday, 12 August 2016 09:46 AM
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