“Exceptionally” overvalued stocks are about to correct sharply, chief strategist says, and smart money is turning to cash

Traders work on the New York Stock Exchange trading floor during afternoon trading on Nov. 3, 2023.Michael M. San Diego/Getty

  • Market strategist Paul Dietrich said indicators point to a major stock market correction coming.

  • B. Riley Wealth chief investment strategist said the market is “overvalued.”

  • Dietrich said “smart money” is turning money into cash.

Paul Dietrich, chief investment strategist at B. Riley Wealth, said the stock market looks “abnormally” overvalued and indicators point to a sharp correction coming.

talking Yahoo FinanceDietrich pointed out that some indicators in the market are sending collective warning signals to the stock market.

There are red flags on the S&P 500’s price-to-earnings multiples, which reflect levels seen before the dot-com bubble collapsed.

“Every indicator seems to be telling us that we are in a historic bubble,” Dietrich said. “It’s hard to say that we won’t see a major correction coming. Now is not the time.” Money is being put into the market,” he warned.

Dietrich said the biggest indicator of the coming correction is “smart money” investors who are moving away from the stock market and into safer cash equivalents.He points out that billionaires have recently sold stocks, e.g. Jeff Bezos, Warren Buffett,as well as walton familyThe heir to the Walmart empire, a sign that big investors realize the market is about to correct.

While sales by insiders or major shareholders tend to be prepare in advanceDietrich said they could also be a sign that investors are worried the market is about to peak.

“There’s no ambiguity here. It’s overvalued,” Dietrich said of the stock market. “You see smart money moving a lot of money into cash right now. … It’s not Say they don’t believe in their company. They do. They know it’s completely overvalued and if they sell it now, they can buy it back cheaper later.”

Dietrich said it was unclear what might trigger the coming stock market correction, noting that previous crashes, such as the one that preceded the 2008 crisis, were driven by Unpredictable black swan events.Oil prices soar due to geopolitical conflictsOr more Regional banking issues He speculated that risks emanating from the commercial real estate sector could cause the stock market to fall.

At a time when most investors remain bullish on the stock market and the economy, Dietrich ranks himself among Wall Street’s most pessimistic forecasters. Previously, he predicted, Stocks could plunge as much as 40% If the United States suffers a mild recession.

Read the original article business insider

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