Stock markets and cryptocurrencies are at highs. But will it last there?

The American S&P 500 index has increased by 20 percent since last November, and the NASDAQ technology index has appreciated by 30% in the same period. The winner was the Japanese Nikkei index, which broke the last 34 years of depression with its current highs.

I have good reasons, but there are voices that the current growth of the stock market and other assets is not healthy. According to our view, the market now remains in an irrational state. It is so possible that he acted and valued the event much more optimistically, than the answer to reality, for example the analyst of BHS company Timur Barotov.

And the investment analyst of the Partners group, Martin Mat, says the same. He points out that especially on the American stock exchanges, only a few million companies are growing, the majority of which are technology titles.

These are the seven main companies that include the main companies such as Meta, the operator of Facebook, or the manufacturer of ip for artificial intelligence Nvidia, he explains.

According to Mata, a narrow investor with regard to the world’s main technology companies has a long-term view. The approach of investors to technology titles values ​​as uncritical and the door in their business and never-ending growth of profit as money.

Yes, artificial intelligence, social media and robotization are the next breakthrough that will advance efficiency, but nothing grows in the sky and every day is not free, to Martin Mat.

Blinded by technology

According to stock analysts, the markets reached a death knell last year after a pessimistic year 2022. And the positive mood of stock investors continued smoothly until 2024. Artificial intelligence (AI) became the main driver of growth last year. This is where the source and the big door and the popularity of technological degrees come from. And the reality is that the results of some technology companies will be real soon.

Nvidia’s revenue in the data center segment increased by more than 400 percent in the last quarter to a total of half a trillion crowns, XTB analyst Tom Vranka said that Nvidia is paying for the current hit in the markets.

No wonder, the Nvidia company developed specialized ips for inputs, they stand for AI. Thanks to the AI ​​boom in recent months, one such IP with the designation H100 or H200 is produced in pepot and for a million crowns. This segment accounts for more than 80 percent of the company’s revenue. And apart from Nvidia, no one else actually produces such IPs.

However, even here, according to Martin Mata, it is true that one spring does not last long. He claims that equity investors have been completely blinded by the door to one hundred markets, i.e. technology titles, and that the markets currently largely ignore fundamental factors and the macroeconomic situation.

I’m talking about a hundred high-yielding central banks that won’t fall as fast and low as investors have gotten used to over the last ten years, or about geopolitical risks. Here I can change a large number of options and increasing risks in certain regions. All this creates a booming mix that can be corrected very quickly, explains Mat.

Economics and central banks

Even though at the end of the year and at the beginning of this year, many analysts thought that central bank rates would go down for years, the optimistic optimism quickly took over.

We don’t think that rate hikes will be so fast and aggressive. Central banks will be very careful not to make a mistake. Only then will they start to dream about rates, and they will be fully sure that there is no threat of an increase in inflation. They certainly won’t want to cut rates sharply to show that the inflationary episode is far from the last word, according to Amundi asset manager John OToole.

However, don’t let it be certain that the rates will not go down. They are coming, but not as fast as many imagined. In addition, John OToole suggests that the door to free monetary policy is in America, not in Europe. Similar to the situation of values ​​in Matt. And not only from the point of view of the long-term development of annual rates, but also of days on the markets. There is no clear answer to the question of whether investors should expect a correction in the near future. The reason is that something has to trigger the correction. And the problem is that nobody knows today what it will be.

According to OToole, there is not enough risk in the markets. In the first report, inflation can return, even if it will not reach such values ​​as last year and the year before. The actions of central banks in relation to years will depend on it. These are dleit for oiven economy. However, markets can also be sensitive to the outcome of the US presidential election. Even when it doesn’t have to be the bane of correction, as he explains.

During the American elections in 2016, we tried to hedge against the political risk that someone like Donald Trump would become president. But then it turned out that the market reacted to it in an unusually positive way, because Trump drank and dreamed the tax. In essence, it greatly supported the domestic economy. The financial markets were really strong. Regardless of what you think of the hunter or his politics, k.

But there are also risks. In Europe, it should be the equivalent of the Green Deal, in the world, the conflict in Ukraine should be transferred to other countries. Problematic even according to the structure Close entrance. Long-term analysts also point out the growing social tension in society and the failure of political elites.

The markets are growing, what will last?

If the investment in the market of sour cream is current, it is certain that it will end later. that growth will be followed by decline, because such are the laws of financial markets. But for now, nothing out of the ordinary is happening. If it remains so, the total value of the stock index at the end of this year should be roughly the same as at its beginning. Or will everything be completely different.

When does the tipping point occur? It’s anyone’s guess, but personally, I would be cautious mainly about stocks in the technology sector. The rest of the market is not so fundamentally broken and would not have to suffer so much, according to Martin Mat.

It also depends on the current growth in the cryptocurrency market, where, as in the stock market, records are being set, especially bitcoin. Some even assume that it will soon cross the $100,000 mark. And it’s not only the fact that the US approved an ETF for bitcoins or the so-called bitcoin plenum at the end of the year (the division of the cryptocurrency into several units, even if the total volume of bitcoins does not increase, editor’s note), but first of all the uncertainty in the real economy, politics and customs in general company.

In this case too, according to Mata, caution is needed instead: From an investor’s point of view, cryptocurrencies are a commodity, its value is fundamentally zero. Torn value is made only by speculative demand and supply. In addition, the value of cryptocurrency is extremely volatile and can be influenced by the concentration of how many investors manipulate the price without control, eventually abusing the entire cryptocurrency system to their advantage.

According to him, in the case of bitcoin, it is not an investment in the true sense of the word, but rather a kind of casino, where you can guess whether the price will rise or not. Even he, however, claims that anyone who knows how to walk in it can make a fantastic living on bitcoin and other cryptocurrencies. Similar to how those who bet on technology titles in the past lost out. But what about self-loan and reverse pay? If the current growth in the markets collapses like a house of cards, many investors may sell their last pants.