Buffett indicator hits 200%; Citi warns: US stocks may crash at any time, bulls are too optimistic

动区动趋 BlockTempo

24-10-25 13:33

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Original title: "Buffett indicator hits 200%! Citi warns: US stock market flash crash may occur at any time, bulls are too optimistic..."

Original author: Editor Jr., BlockTempo

Benefiting from the in-depth development of artificial intelligence (AI) technology and the start of the monetary easing policy cycle by the Federal Reserve (Fed), the US stock market has ushered in a real "long bull" this year: not only have Apple, Nvidia, and Tesla's share prices continued to rise this year, but the S&P 500 index also hit its 48th record high this year on October 18, approaching the 6,000 point mark, and has risen by 22.6% so far this year.

Image source: Google Finance

Buffett indicator reaches 200%

However, in the face of the current hot U.S. stock market, @Barchart reminded investors on Twitter the day before (23) that the so-called "Buffett indicator" has recently reached 200% for the first time in history, surpassing the Internet bubble and the global financial tsunami.

"The Buffett Indicator was published by Warren Buffett in Fortune magazine in 2001. It is the ratio of the total market value of U.S. stocks to GDP. Buffett said that he used this ratio to observe whether the market value of U.S. stocks is supported by the real economy. If the ratio is very low, it means that the stock price is undervalued, otherwise the market is overvalued."

Citibank: S&P 500 exposure has reached the highest level since mid-2023

Against this background, Citibank analysts pointed out in a report this week that the current exposure of the S&P 500 has reached its highest level since mid-2023, and the market is showing warning signals that it may collapse at any time:

"The long position of the S&P 500 has now reached The highest level since mid-2023, when such exposure levels led to a decline of more than 10% in the next three months.

We are not suggesting that investors should start reducing their positions, but when the market develops to this point, the risk of holding positions will undoubtedly increase. ”

However, it is worth noting that the Citi strategist team led by Chris Montagu also pointed out that the prospect of a soft landing for the US economy has supported the bullish momentum of US stocks and the S&P 500 index. Although the current exposure is very high, it is not as extreme as it was in 2023. Therefore, short sellers who choose to increase their positions in the short term will also bear higher risks:

"Despite the uncertainty of the US election in November, the narrative of a soft landing for the economy and the solid financial reports have undoubtedly supported investors' bullish momentum.

The current market situation is that all short sellers are in a loss, but if they continue to cover their positions, they may still face the risk of an upturn in the market in the short term."

Gold has risen 32.5% this year

It is worth mentioning that gold, which has long been regarded as a hedge against political and economic uncertainty, has risen 32.5% so far this year and in October On the 23rd, it hit a record high of $2,758 per ounce. It fell slightly yesterday (24th), and was at $2,733 per ounce at the time of writing.

However, Bob Haberkorn, strategist at RJO Futures, said that the market may be taking some profits at present, but as risk aversion has not weakened, gold prices are expected to continue to rise to $2,800 this weekend.