Market in Peril: John Hussman Warns of 1929-like Bubble, Anticipates Steep Crash Ahead

Investor John Hussman is sounding the alarm on the current stock market, comparing it to historic bubbles like those before the 1929 crash and the peak in 2021. He warns that stock valuations now mirror those preceding past market downturns, signaling a looming correction.

Despite the market hitting record highs due to optimism about the Federal Reserve’s recent policy update, Hussman believes this enthusiasm has put the market in a dangerous position akin to previous crash scenarios.

He points to various valuation metrics, including his firm’s measure of the ratio of nonfinancial market capitalization to gross value-added, which is now at its highest level since the 1929 peak before the subsequent crash.

Expressing concern over what he sees as the “double-top of the most extreme speculative bubble in US financial history,” Hussman emphasizes the risks of over-speculation. He notes that in previous instances, stocks have hit a speculative limit before facing sharp declines.

Hussman’s bearish outlook contrasts with the prevailing bullish sentiment among investors during the market’s prolonged rally.

Despite refraining from making an official forecast, he has warned of the potential for a significant market downturn, suggesting that a defensive stance is wise given current market conditions.