Does anyone recall that for a couple of months in 1989, the Japanese stock market made up 50% of the value of global share market; that 15 of the 20 most valuable companies in the world, were Japanese?
History may not repeat, but it certainly rhymes…
Just realised we have been updating this diagram continuously for almost five years. To be honest, we were absolutely certain a mean reversion event would have occurred post the Meme Stock peak. And yet the market has continued its relentless climb.
Make no mistake, this is the great financial bubble of our generation. Even taking into account our poor predictive record to date – we seriously doubt we will see another two quarters with that red line continuing its 45 degree upward trajectory.
It is our belief that this coming mean reversion event will hammer all asset classes, everywhere, with the possible exception of bonds (which incidentally, have been the worst performing asset class for the past several years).
