World wide stock market crash

A stock market crash is a way off, but this boom will turn to bust | Larry Elliott | Business | The Guardian

The "bubble boys" are back in droves. From global investor Marc Faber, who said on CNBC Tuesday that U. Whether or not it is appropriate for a presidential candidate to express doubt about the safety and soundness of U. It is true that market valuation are stretched, sitting as they are against a backdrop of declining corporate profits; soft economic growth, both here and abroad; interest rate policy reaching the limits of its efficacy abroad; and the threat of interest rate increases here at home.

Stocks have, however, remained stubbornly resilient. That said, there are signs of strain in the market. Internal technical indicators are not as strong as one would like if, indeed, stocks were poised for a new, secular, or long-term leg upwards. Stock market leadership is coming from very defensive, or "recession resistant" groups like healthcare and consumer staples, rather than from faster growing sectors like technology, financials and consumer discretionary issues.

European Stock Markets - CNNMoney

The folks at Ned Davis Research, one of the most widely respected research houses around, just tweeted out some data that warrant consideration, suggesting that on a relative basis, stock market valuations look ok. However, on an absolute basis, in other words, when compared to other pricey periods in stock market history, the market looks stretched.

NDR notes that when price to earnings ratios are above 20, as they are today, the market has about as much chance of going up 12 months hence as it has of going down. NDR's recommendation is to take some protective measures. That could mean buying protective put options on individual stocks or the market as a whole. It could also mean taking profits on stocks that have shot up and whose valuations are stretched.

Many experts suggest selling out the initial investment and playing with house money so that one's capital is safe.

Of course, the bears have suggested for years that this market is due for a serious decline. And we have had several corrections since this bull market began on March 9, I am not in the bubble camp, but I am growing more cautious about the state of the stock market.

There are other issues to be concerned about regarding the financial markets. Certain credit spreads have widened, indicating signs of strain in the global financial system. British and European interest rates, Tuesday, fell to record lows.

That is also indicative of weak growth overseas and a potential negative for future profit growth here at home. European banks are under duress. Japan, China, Russia, Saudi Arabia, Brazil and Venezuela have varying degrees of economic distress. Goldman Sachs recent told clients to stay away from stocks for the next three months. That's a trading tactic, not an investment strategy. Walt Disney looks good again.

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And other strong, brand name franchises remain solid long-term investments. If the Fed raises rates persistently in the months ahead, we will quickly find out if there are system strains in the market. Unless, or until, that occurs, the market is stretched, but a crisis, is not yet in the making. Never say never, but the signs that flashed red before the last crisis are, at best, flashing yellow right now.

Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. Follow him on Twitter rinsana. For more insight from CNBC contributors, follow CNBCopinion on Twitter. Asia Europe Stocks Commodities Currencies Bonds Funds ETFs Investing Trading Nation Trader Talk Financial Advisors Personal Finance Etf Street Portfolio Watchlist Stock Screener Fund Screener Tech Mobile Social Media Enterprise Gaming Cybersecurity Tech Guide Make It Entrepreneurs Leadership Careers Money Specials Shows Video Top Video Latest Video U.

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The 'bubble boys' are wrong about this market Ron Insana rinsana. Let's deal with the issue at hand.

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