Veteran managers warn over exuberance as stock valuations and other signals flash red
Screaming stock rallies and wild speculation by have-a-go amateur investors are stirring concerns among market veterans over a bubble to rival anything seen in the past century.
After a dramatic rebound from the coronavirus crash last March, benchmark equity indices have toppled a series of record highs in the early days of 2021. Bitcoin, the most speculative bet of them all, has raced to new extremes. Popular stocks like Tesla continue to defy efforts at sober valuation.
Baupost Group founder Seth Klarman has warned that investors are under the misplaced impression that risk in markets “has simply vanished”, likening them to frogs being slowly brought to the boil. GMO co-founder Jeremy Grantham has described the rally since 2009 as an “epic bubble” characterised by “extreme overvaluation”.