Typically, most people don’t think seriously about the Federal Reserve, and only a few think about the agency’s impact on investors. But over the past few years, that has started to change. Many economists and astute market watchers believe that the “everything bubble” created by years of easy money by the Federal Reserve and other central banks following the Great Financial Crisis is now bursting.
The idea that everything is a bubble is not new. Wall Street leaders, including investing legend Jeremy Grantham, have been warning for years that a “super bubble” is brewing in the years leading up to 2022, when the stock market crashes. The view is that near-zero interest rates and quantitative easing (QE) — in which the Federal Reserve will buy mortgage-backed securities and government bonds to facilitate lending and investment — push investors into riskier investments, allowing unsustainable business The model thrived on cheap loans and fueled the Pandemic Housing Boom.
It’s early days, but in retrospect, there are many outlandish financial predictions in this era of low-interest money. As inflation continues to run rampant and recession fears mount, things aren’t looking good for Americans. But there is also a silver lining in the financial world. The All Things Bubble has brought about the most ridiculous and comical predictions in history.
From cryptocurrency pundits and hedge fund managers to economists and investment banks, the era of cheap money is full of bulls who believe the good times will never end. Here’s a look at some of their wildest predictions.
bitcoin bulls
The cryptocurrency boom in 2020 and 2021 is unprecedented. From January 2020 to the peak of the cryptocurrency boom in November 2021, the total value of the industry grew to more than $3 trillion, and the price of Bitcoin (BTC) soared by about 800%.
Cryptocurrency true believers are sure that the party has only just begun. Billionaire venture capitalist Tim Draper said in June 2021 that Bitcoin will reach $250,000 by the end of 2022. “I think I’m right on this one,” he assured CNBC’s Jed Scipioni.
Bitcoin eventually ended 2022 at just over $16,500, but just in December, Draper once again claimed that Bitcoin would hit $250,000, this time saying it would hit $250,000 by mid-2023.
Draper said in an interview with the US Consumer News and Business Channel: “I expect people to turn to high-quality, decentralized cryptocurrencies like Bitcoin, and some non-mainstream cryptocurrencies will become relics.”
Tim Draper did not respond to Fortune’s request for comment.
Draper isn’t the only leading figure to jump on the bitcoin train and make over-the-top predictions in an era of low-interest money. ARK Invest’s Kathy Wood was the first public asset manager to gain exposure to bitcoin through the Bitcoin Investment Trust, a 2015 survey of her exchange-traded funds (ETFs) that track tech indices. part.
That gamble led to Wood facing harsh criticism from his peers, but barring a brief crypto winter in 2018, it paid off when bitcoin’s price soared above $65,000 by November 2021.
Wood is sure that the good times will continue throughout the bull market. In November 2020, she told Barron’s that by 2026, institutional investors investing in cryptocurrencies will push the price of Bitcoin to $500,000, and repeatedly “as Bitcoin falls” Buy the dip”. Wood even told The Globe and Mail in a February 2020 interview that bitcoin is “one of the largest positions” in her retirement account.
Even in early 2022, when the price of Bitcoin fell from a high of more than $65,000 to just under $50,000, the CEO of Ark Investments remained bullish on Bitcoin. In Ark Ventures’ “Big Ideas 2022” annual research report, she believes that the leading cryptocurrency will reach $1 million by 2030.
Since then, the price of Bitcoin has fallen by more than 60%, but Wood and her team are not panicking, and they still believe that their prediction is reasonable.
“We think Bitcoin can come out of the mud,” Wood told Bloomberg in December 2022. She believes that institutional investors will eventually buy in after Bitcoin weathers the “baptism of war” of the cryptocurrency winter. bitcoin.
Kathy Wood did not respond to Fortune’s request for comment.
Tom Lee, director of research at Fundstrat Global Advisors, previously served as chief equity strategist at JPMorgan Chase (JPMorgan) and has worked on Wall Street for more than 25 years. He has also been bullish on Bitcoin. At the beginning of 2022, he predicted that Bitcoin would reach $200,000 in the next few years.
Despite the recent drop in bitcoin, which he admitted was “scary” for investors, he said in a November 2022 interview with Consumer News and Business that he still believes bitcoin will come out of its current downtrend , and reach the target value of $200,000. But while many cryptocurrency forecasters are sticking to their overvalued valuations, Wall Street has pulled back some of their predictions.
Tom Lee did not respond to Fortune’s request for comment.
The stock market is overvalued
In the era of cheap money, investment banks have made some pretty amazing predictions. After the stock market surged during the new crown epidemic and returned investors 28%, Wall Street believes that the stock market will slow down in 2022, but not to the extent that it actually slows down.
The investment bank expects the S&P 500 to close at 4,825 by the end of 2022, a gain of just 1% for the year. Instead, the blue-chip index fell about 20%.
The (perhaps unwarranted) bullish sentiment from investment banks is especially evident when looking at price targets for growth stocks that benefit from pandemic trends. Shares of online used-car retailer Carvana, for example, have soared during the pandemic as used-car prices rose to record highs.
The company can take advantage of consumers’ inability or unwillingness to purchase vehicles in person during the COVID-19 pandemic, leading some analysts to offer incredibly bullish forecasts.
In January 2022, Morgan Stanley auto analyst Adam Jonas called Carvana “the top player in auto retail” and set a 12-month price target on the stock of $430. Since then, shares of the online auto retailer have plummeted more than 97%, falling to just $4.48. Some analysts believe there is more pain to come for investors.
Morgan Stanley did not respond to Fortune’s request for comment.
New Construct CEO David Trainor warned investors in June 2022 that Carvana was burning cash at an unsustainable rate and might not survive.
“Time is running out for cash-burning companies that can easily get funding and stay afloat,” Trainor told Fortune. “These ‘zombie’ companies are at risk of bankruptcy.”
Coinbase is another example of the craze that has taken hold on Wall Street over the past few years. When the cryptocurrency exchange went public in April 2021, the share price soared from a reference price of $250 to $381 per share.
Jim Cramer of Consumer News & Business, a former hedge fund manager, tweeted after Coinbase went public that he was “bullish on Coinbase stock price, thinks it will go to $475. He’s not alone, with investment banks’ average price target on the exchange at the start of 2021 exceeding $400 a share.
Since then, however, Coinbase’s stock price has fallen by more than 90% amid the crypto winter. Cramer has changed his mind, saying in a Dec. 13 tweet that he “wouldn’t be buying Coinbase stock,” saying it was “too early.”
Consumer News and Business Network did not respond to Fortune’s request for comment.
The era of low-interest money may have led many forecasters to believe that asset prices would continue to soar regardless of valuations, but what happened in 2022 proved to be a wake-up call for them. Wall Street analysts have slashed price targets for many of the coronavirus stock market darlings. This is a new era for markets and forecasters, Tim Paliara, chief investment officer at investment advisory firm CapWealth, told Fortune in December 2022.
“We’re going to overturn a lot of predictions,” Pagliara said. “There’s going to be a massive revaluation of everything from commercial real estate to how the investing public views cryptocurrencies.” (Fortune Chinese Network)
Translator: Zhong Huiyan-Wang Fang
Most people don’t think about the Federal Reserve very often, and only a select few contemplate the effects that the US central bank has on investors. But over the past few years, that’s begun to change. Many economists and keen market watchers are making The case that years of loose monetary policies from the Fed and other central banks following the Great Financial Crisis (GFC) helped create an “everything bubble”—and now it’s popping.
The everything bubble idea isn’t new. For years before 2022’s stock market woes, leading minds on Wall Street including the investing legend Jeremy Grantham warned about a brewing “superbubble.” The idea is that near-zero interest rates and quantitative easing (QE )—a policy where the Fed would buy mortgage-backed securities and government bonds to boost lending and investment in the economy—pushed investors toward riskier investments, allowed unsustainable business models to thrive on cheap debt, and helped fuel the Pandemic Housing Boom.
It’s early days, but in retrospect a lot of outlandish financial predictions accompanied this era of easy money. And the fallout for Americans hasn’t been pretty, as inflation continues to rage and recession fears mount. But there is a silver lining for the finance community. The everything bubble provided some of the most ridiculous—and hilarious—forecasts in history.
From cryptocurrency experts and hedge fund managers to economists and investment banks, the easy money era was filled with bulls who believed the good times would never end. Here’s a look at some of their strangest calls.
The Bitcoin bulls
The cryptocurrency boom of 2020 and 2021 was unprecedented. Between January 2020 and the peak of the crypto fervor in November 2021, the industry’s total value grew to over $3 trillion and Bitcoin prices soared roughly 800%.
The crypto faithful were sure that the party was just beginning. Billionaire venture capitalist Tim Draper said in June 2021 that Bitcoin would hit $250,000 by the end of 2022. “I think I’m going to be right on this one,” he assured CNBC’s Jade Scipioni.
Bitcoin ended up finishing 2022 just above $16,500, but just in December, Draper repeated his call for Bitcoin to hit $250,000—this time he said it would be by the middle of 2023.
“I expect a flight to quality and decentralized crypto like bitcoin, and for some of the weaker coins to become relics,” Draper told CNBC.
Tim Draper did not respond to Fortune’s request for comment.
Draper wasn’t the only leading figure to jump on the Bitcoin train during the easy money era and make lofty forecasts either. ARK Invest’s Cathie Wood was the first public asset manager to gain exposure to Bitcoin via the Bitcoin Investment Trust (GBTC) as a part of her tech-focused exchange-traded ETFs in 2015.
The bet led Wood to face serious criticism from her peers, but barring a brief crypto winter in 2018, it paid off as Bitcoin’s price soared to over $65,000 by November 2021.
Wood was sure that the good times would last throughout the bull market. In November 2020, she told Barron’s that institutional adoption of crypto would drive Bitcoin’s price to $500,000 by 2026 and repeatedly “bought the dip” whenever Bitcoin prices even fell. Globe and Mail in a February 2020 interview that Bitcoin was “one of the largest positions” in her retirement account.
The ARK Invest CEO remained bullish even at the start of 2022, when Bitcoin prices had fallen from their highs of over $65,000 to just under $50,000. She argued that the leading cryptocurrency would touch $1 million by 2030 in ARK’s “Big Ideas” annual re202 report.
Since then Bitcoin’s price has dropped more than 60%, but Wood and her team aren’t fazed, and still believe that their prediction is fair.
“We think Bitcoin is coming out of this smelling like a rose,” Wood told Bloomberg in December, arguing that institutions will eventually buy into Bitcoin after it is “battle tested” by the crypto winter.
Cathie Wood did not respond to Fortune’s request for comment.
Tom Lee, head of research at Fundstrat Global Advisors, who previously served as chief equity strategist at JPMorgan and spent over 25 years on Wall Street, has also been a perennial Bitcoin bull. In early 2022, he predicted that Bitcoin would hit $20 the0, coming years.
And despite the recent fall, which he admitted has been “horrific” for investors, Lee told CNBC in November that he still believes Bitcoin will come out of the current downtrend and hit his target. But while many crypto forecasters are sticking by their lofty estimates , Wall Street has been walking back some of theirs.
Tom Lee did not respond to Fortune’s request for comment.
Lofty stock market forecasts
Investment banks made some pretty dramatic forecasts during the cheap money era. After the stock market soared throughout the pandemic, returning 28% to investors, Wall Street was confident that things would slow down in 2022, but not to the extent that they actually did.
Investment banks expected the S&P 500 to end 2022 at 4,825, representing only a mild 1% gain for the year. Instead, the blue-chip index dropped roughly 20%.
The (perhaps unwarranted) bullishness among investment banks was particularly clear when looking at the price targets for growth stocks that benefited from pandemic trends. The online used car retailer Carvana, for example, soared throughout the pandemic as used car prices high record rose to
The firm was able to take advantage of consumers’ inability or unwillingness to shop for vehicles in person during COVID, leading some analysts to give incredibly bullish forecasts.
In January 2022, Morgan Stanley’s auto analyst Adam Jonas called Carvana the “apex predator in auto retail” and assigned a $430 12-month price target to the stock. Since then, shares of the online car retailer have plummeted more than 97% to just $4.48—and some analysts believe more pain lay ahead for investors.
Morgan Stanley did not respond to Fortune’s request for comment.
New Construct’s CEO David Trainer warned investors in June 2022 that Carvana was burning cash at an unsustainable rate and may not survive.
“Time is running out for cash-burning companies kept afloat with easy access to capital,” Trainer told Fortune. “These ‘zombie’ companies are at risk of going bankrupt.”
Coinbase is another example of the fervor that developed on Wall Street over the past few years. When the cryptocurrency exchange went public in April 2021, shares spiked from their $250 reference price to $381 per share.
CNBC’s Jim Cramer, a former hedge fund manager, took to Twitter after the IPO, saying that he “liked Coinbase to $475.” And he wasn’t alone, investment banks’ average price target for the exchange was over $400 per share in early 2021.
Since then, however, Coinbase stock is down more than 90% amid the crypto winter. And Cramer has changed his mind, saying in a December 13 tweet that he was “not a buyer of Coinbase here,” calling it “too early.”
CNBC did not respond to Fortune’s request for comment.
The cheap money era may have led many forecasters to assume that asset prices would continue to soar, regardless of valuations, but this year has proven to be a wake-up call. Wall Street analysts have slashed their price targets for many of the stock market’s pandemic darlings. It’s a new era for markets and forecasters, as Tim Pagliara, chief investment officer of the investment advisory firm CapWealth, told Fortune in December 2022.
“We’re going to be unwinding a lot of the speculation,” Pagliara said. “There’s going to be a lot of revaluation of everything from commercial real estate to how the investing public looks at things like crypto.
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