JPMorgan Predicts Market Bubble Might Pop Soon
The gap between the underperformance of value stocks and outperformance factors is twice as large as the dot-com bubble, according to Business Insider.
Low-volatility and momentum-driven stocks are booming and leaving value stocks in the dust. JPMorgan's global head of macro, quantitative, and derivatives strategy expected value stocks to continue their hot streak in 2019 into 2020.
However, since July 2019 the gap between value and outperform factors has grown. "We caution investors that this bubble will likely collapse, i.e. this time is not 'different', with valuations reverting closer to 2010-2020 average," Kolanovic said.
Furthermore, he believes investor's response to the coronavirus is contributing to the gap as investors flock towards Treasuries and tech stocks while leaving energy in the dirt. The performance gap between energy and tech stocks is also as wide as it was during the dot-com bubble.
The gap between the underperformance of value stocks and outperformance factors is twice as large as the dot-com bubble.