Stocks may want to go through a correction, but the market is unlikely to revel in a “prolonged streak” and investors buy falls, according to a note from Desh Peramunetilleke of Jefferies.
While some on Wall Street warn that the stock market is in a bubble about to burst, Peramunetilleke said the bubble would not burst immediately and that 2021 would be “a flat year” for stocks.
The stock market analyst cited a “profit collapse” and possible financial hardening as two points that can cause the market bubble to burst. But for now, the threat of those points materializing is low, he said.
Based on 59% of the reported earnings, the S
An unforeseen increase in interest rates can cause the bubble to burst, Peramunetilleke said this probably won’t happen soon. Other potential market hazards come with a “total relapse” of COVID-19, rapid increases in U. S. taxes, “paralyzing generation regulations” and an escalation of generational warfare between the United States and China. However, the analyst stated that the probability of all those occasions is low enough that you feel comfortable buying a drop in the market.
“As a result, existing markets will be bright and we want to be corrected, but they are unlikely to see extended development. We’re on the shopping field,” Peramunetilleke said.
“There is also a threat that a disconnect from retail will seriously alter the overall stability of the system, although we are confident that central banks will restrict the effect of such an event,” he added.