Stock Market Bubble? Warning Sign A Storm Is Coming

Every big bull market—before it ends—is characterized by an astonishing story or event that, in retrospect, beggars belief. 

In 2008, for example, it was the housing bubble. 

In this episode of What’s Ahead we examine the unbelievable story of this particular bull market: the eye-popping, unprecedented battle between sophisticated, multibillion-dollar hedge funds and literally hundreds of thousands, if not millions, of small investors who mobilize via bulletin boards at Reddit and other similar sites to send certain stocks to astronomical levels. 

The most notable example is GameStop, a humdrum retailer that’s been decidedly unimpressive in adjusting to online shopping but has gone from $2.57 a share last year to over $300. That level is utterly unrelated to any kind of reality.

Powerful hedge funds have been short-selling these stocks, but the small investors—by sending up the prices of such stocks to ever higher levels—are delivering punishing losses to the big guys. Many individuals are borrowing money to buy these equities.

It’s madness, and it won’t end well.

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Steve Forbes is Chairman and Editor-in-Chief of Forbes Media. Steve’s newest project is the podcast “What’s Ahead,” where he engages the world’s top newsmakers,

Steve Forbes is Chairman and Editor-in-Chief of Forbes Media. Steve’s newest project is the podcast “What’s Ahead,” where he engages the world’s top newsmakers, politicians and pioneers in business and economics in honest conversations meant to challenge traditional conventions as well as featuring Steve’s signature views on the intersection of society, economic and policy. Steve helped create the recently released and highly acclaimed public television documentary, In Money We Trust?, which was produced under the auspices of Maryland Public television. The film was inspired by the book he co-authored, Money: How the Destruction of the Dollar Threatens the Global Economy – and What We Can Do About It. Steve’s latest book is Reviving America: How Repealing Obamacare, Replacing the Tax Code and Reforming The Fed will Restore Hope and Prosperity co-authored by Elizabeth Ames (McGraw-Hill Professional). Steve writes editorials for each issue of Forbes under the heading of “Fact and Comment.” A widely respected economic prognosticator, he is the only writer to have won the highly prestigious Crystal Owl Award four times. The prize was formerly given by U.S. Steel Corporation to the financial journalist whose economic forecasts for the coming year proved most accurate. In both 1996 and 2000, Steve campaigned vigorously for the Republican nomination for the Presidency. Key to his platform were a flat tax, medical savings accounts, a new Social Security system for working Americans, parental choice of schools for their children, term limits and a strong national defense. Steve continues to energetically promote this agenda.

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