Warren Buffett Owns 2 S&P 500 Index Funds. They Could Soar 153%, According to a Top Wall Street Analyst
On the eve of a big drop on Friday, David Einhorn, who became famous for profiting during the Lehman crisis, stated that the structure of the U.S. stock market is collapsing.
David Einhorn stated that due to the rise of passive investing and investors placing more importance on price rather than value, overvalued Stocks become even more overvalued and undervalued Stocks become even more undervalued. This phenomenon distorts market value and plants significant hidden risks.
"Returning to the pre-liberation era overnight"! The U.S. stock market has erased its gains after the election, and the employment report worries Wall Street about a "double loss" in stocks and bonds.
Measured by the performance of the largest Global ETF tracking the S&P and long-term U.S. Treasury bonds, the total returns of U.S. stocks and bonds have been negative for five consecutive weeks, marking the longest streak of negative returns since September 2023. Friday's non-farm payroll report raised concerns among traders about the Federal Reserve closing the door on this round of easing.
U.S. stocks may face greater downward pressure. Analysts suggest that the S&P 500 Index could drop by 15%.
The rapid rise in U.S. bond yields may indicate that the stock market will decline further.
Overnight US stocks | The three major indices all recorded losses this week, with the S&P 500 Index erasing all gains since the USA election.
As of the close, the Dow Jones fell 696.75 points, a decline of 1.63%, closing at 41,938.45 points; the Nasdaq fell 317.25 points, a decline of 1.63%, closing at 19,161.63 points; the S&P 500 Index fell 91.21 points, a decline of 1.54%, closing at 5,827.04 points.
There is some froth, but not excessive! Howard Marks' 2025 year-start memo.
There is no asset so good that its price never experiences "overvaluation" and risk, nor is there an asset so bad that its price never presents an opportunity for "undervaluation".