“The purchase, which continued in August and September, is a 10-year phenomenon similar to what we have never seen in millennia and risk-taking among people who don’t want to own bonds and want to have overpriced U.S. business, he has record proportions. ”
This is Cole Smith, president of Smead Capital Management, explaining in an interview with CNBC on Thursday how “young, dumb” investors have created a “total nightmare” in the current climate.
Smid went on to say that these nasal valuation levels are an example of “stock market failure” by those inexperienced millennials who have been drawn to take oversized risks in stocks for the first time in their lives.
“They buy bullish stake options that expire in two weeks. “There were ($ 500 billion) bullish stake options bought in four weeks from small retailers,” Smead said. “In ’99 it was $ 100 billion, in ’07 it was $ 100 billion.”
In other words, we have reached the next level of fever in US stocks. When it turns around, it could be ugly, according to Smead, who said that despite a flexible monetary policy, the Federal Reserve ultimately “cannot save the stock market” – especially the heaviest one.
Smid told the Wall Street Journal in an interview published last week that “We spend half our time right now telling people how dangerous things are.”
However, it is not only the younger generations who are to blame. Smead says baby boomers certainly deserve some of the blame for running a “wine index” and paying unrealistic bonuses for longtime winners like Costco COST.
and Microsoft MSFT,
“Microsoft is a wonderful company,” he told CNBC. “But with 40 times the profit, there is a 0% chance that it will create wealth for someone over the next 10 years to meet their needs.”
Here is a video from the interview:
Meanwhile, stocks bounced back from the lows of the trading session, but the Dow Jones Industrial Average DJIA,
Nasdaq Composite COMP,
and S&P 500 SPX,
they were all still solid red until Thursday afternoon.