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Robert Kiyosaki, the American author known for his popular personal finance books, has taken to the X social media to warn millions of his followers about the "everything bubble" in U.S. stocks, bonds and real estate. The financial commentator predicts that this bubble is "set to crash."
Kiyosaki has recommended his followers to hedge against this possible crash by buying precious metals (gold and silver) as well as Bitcoin, the largest cryptocurrency by market cap.
Is there stock market bubble?
Even though many investors are concerned about a potential stock market bubble being in the making, historical data shows that their concerns are not grounded in reality. As Reuters points out, the only actual post-World War II stock market bubble burst in the early 2000s during the internet boom. Various companies reached ridiculous valuations during the "dot-com" bubble phase, and this mania eventually turned into a severe bear market.
However, the business media outlet has also noted that corporate balance sheets are currently in good shape, which indicates that the persistent warnings about the "everything bubble" could simply be fear-mongering.
With that being said, SocGen’s Albert Edwards recently opined that various stocks might indeed be showing some telltale signs of a market bubble. He further argued that the artificial intelligence craze might be getting out of hand.
Portfolio diversifier
In 2022, the Bitcoin price plunged in tandem with U.S. stocks as the Federal Reserve rushed to hike interest rates in order to tame out-of-control inflation. This prompted many critics to call Bitcoin's diversification abilities into question. That said, Bitcoin might be a more attractive portfolio diversifier in 2024.
In the meantime, Jurrien Timmer, director of global macro at Boston-headquartered financial giant Fidelity Investments, recently pointed to the fact Bitcoin now has a negative correlation with the benchmark S&P 500.
Denys Serhiichuk
Valeria Blokhina
