February 21, 2024

Buffett, Rosenberg, Kiyosaki Shrug Off 2023 Rally

  • US stocks have enjoyed a breakneck rally this year, but not everyone’s so optimistic about it.  
  • Some think the rally is a red flag to investors, and others predict dire crashes for stocks. 
  • Here’s six bearish views on the sizzling rally in equities, from Warren Buffett to David Rosenberg. 

US stocks have been on a roll this year thanks to the AI frenzy – but not everyone thinks it’s a good thing. 

From Warren Buffett to David Rosenberg, there’s a chorus of market commentators throwing cold water on the fiery stock rally. 

Equities have had a great year, with the S&P 500 notching up one of its best performances since 1927 thanks to investor excitement around artificial intelligence. The index is up almost 18% this year, while the Nasdaq is up 34% and the Dow Jones is 6% higher. 

The jump in stocks also follows positive economic data – including falling inflation and robust jobs numbers. That’s given investors even more incentive to pile into equities, adding fuel to the stock rally. 

While some, including Oppenheimer, have made the case for another 28% surge in stocks this year, others warn the breakneck rally should be a red flag to investors. 

Here’s 6 bearish stock market calls amid the stock market’s breathless climb. 

Warren Buffett, Berkshire Hathaway CEO 

Despite stocks rising, Buffett highlighted that his favorite market gauge is flashing red, suggesting that equities are overpriced and could crash. 

The Buffett Indicator jumped to 171% last week, with the investing guru previously warning that traders looking to purchase stocks about the 200% mark would be “playing with fire.”

David Rosenberg, top economist 

The Dow Jones’ stunning climb this year suggests a recession may be underway, according to Rosenberg. The benchmark index recently enjoyed a 13-day winning streak – the longest since 1987. But what followed in the late 1900s was a plunge in stocks five months after stocks similarly rallied as much as today. 

“The giddiness was omnipresent as is the case today and the bears were laughed at … but look at how the year ended … FLAT!” said the Rosenberg Research president.

“It is very possible that the recession has started already, but nobody has noticed,” he added. “The very quarters that the recessions of 1990, 2001 and 2007 began, the narrative was ‘soft landing’ each and every time.” 

Tom Lee, head of research at Fundstrat 

“Markets in holding pattern until the July jobs [report] and July CPI. But be wary,” he said. “Overall, we are entering August just a bit more wary than other months,” one of Wall Street’s loudest bulls said. 

Lee noted that the upcoming jobs report could be strong, leading investors to think the Federal Reserve could continue hiking interest rates – and that’s bad news for stocks. 

Robert Kiyosaki, “Rich Dad Poor Dad author” 

“I do not play the stock or bond markets. As an entrepreneur I like my hands-on control too much. Yet too many signs point to a severe stock market crash. If your future depends on stocks and bonds please be careful, possibly ask for professional advice. Afraid depression coming,” the personal finance guru recently said. 

John Hussman, notorious market bear 

“The valuation extremes we observe imply that a 64% loss in the S&P 500 would be required to restore run-of-the-mill long term prospective returns,” Hussman, who predicted the 2000 and 20008 crashes, recently warned. 

“Despite enthusiasm about the market rebound since October, I remain convinced that this initial market loss will prove to be a small opening act in the collapse of the most extreme yield-seeking speculative bubble in US history,” he added. 

Danielle DiMartino Booth

“We’re not really paying attention because the stock market remains so high,” DiMartino Booth said, referring to investors ignoring several economic red flags. “It’s easy to ignore what’s happening on the ground in the US economy,” she said. 

“We saw similar levels of complacency in 2000 and in 2007,” she added. “Those episodes don’t end very well, but they do give new meaning to the cliché, ‘the calm before the storm.’ I really do think that that’s where we are.”

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