Even after the worst epidemic in history, the three delusions of life still seem to be delusions, and nothing seems to have changed.

Just now, US stocks have set a new record high, and the Nasdaq is only one step away from the record high. The most lasting bull market in human history is still "continuing to play music and continue to dance."

While everyone is partying, the danger signal is approaching. At present, the Buffett index of US stocks (total market capitalization of US stocks / US GDP) has reached 190%, higher than the peak during the dotcom bubble in early 2000 and even on the eve of the Great Depression in 1929, meaning that US stocks are at the most expensive level in history.

All this is inseparable from the epic "release" of the Federal Reserve. So when the future US stock market bubble bursts may depend on the inflection point of the Fed's policy.

How long can the most lasting bull market in human history last?

The bull market in US stocks began on March 9, 2009, when the S & P 500 fell to 666.79 at the height of the financial crisis.

Since then, it has reversed in despair and started a bull market, which closed on April 1, local time, with the S & P 500 hitting an all-time high of 4019.87, up more than 500%.

Bank of America Merrill Lynch counted the duration of each bull market in the history of US stocks, which was held by the Internet bull market of 1990-2000, which lasted for 113 months (3452 days), during which the S & P 500 rose 417%.

Today, this record has long been broken, and the bull market in US stocks has lasted for 146.7 months (4401 days) since March 9, 2009, more than any bull market in the history of US stocks.

Under this bull market feast, technology stocks are undoubtedly the biggest winners. At present, the top five stocks in the S & P index with the highest market capitalization are technology stocks, followed by Apple Inc (AAPL), Microsoft Corp (MSFT), Amazon.Com Inc (AMZN), Alphabet Inc-CL C (GOOG) and Facebook Inc (FB), with a total market capitalization of US $2.0397 trillion, US $1.7742 trillion, US $1.5488 trillion, US $1.3825 trillion and US $828.2bn.

Starting from March 9, 2009, as of March 29, 2021, Amazon.Com Inc had the largest increase, with a cumulative increase of 4886%, while Apple Inc ranked second with a cumulative increase of 4536%. Facebook Inc, who has been listed since 2009, has the smallest increase, but it is also more than 6.6 times.

But after the Chinese Lunar New year, US bond yields continued to soar, the market began to worry about inflation, and US technology stocks suffered a collapse. The focus of the market is changing: will US stocks repeat the bursting of the dotcom bubble 20 years ago? How long can this bull market last?

Buffett indicators "burst", how big is the U. S. stock bubble?

The key to answering the above two questions is, how big is the current bubble in US stocks? When will the Fed's "water release" end?

Buffett, the god of stock, wrote in Forbes magazine in December 2001 that the ratio of total stock market capitalization to GDP can be used as an indicator to judge whether there is a bubble in US stocks. Since then, the "US stock market value / GDP" is known as the Buffett index.

Generally speaking, it is a good time to buy u.s. stocks when Buffett's index is between 70% and 80%. If Buffett's index exceeds 100%, investors need to pay attention to the risk of u.s. stocks.

So how big is the current bubble in US stocks?

According to the latest data, the current "Buffett index" in the US stock market has reached 190%, higher than the peak during the Cooknet bubble in early 2000, and even higher than the peak before the Great Depression in 1929. It is the most expensive level in history.

Therefore, judging from the "Buffett index" alone, the valuation of the US stock market has exceeded its all-time high, while other indicators are also confirming that the US stock bubble is approaching its all-time high.

Robert Schiller, author of irrational exuberance and Nobel laureate in economics, has made an in-depth study of the bubble of American stocks since 1870 and proposed to use ten-year periodic price-to-earnings ratio (CAPE) instead of 12-month price-to-earnings ratio index to evaluate American stocks. This valuation system can accurately identify the stock market bubble before the Great Depression in 1929 and the technology stock bubble in 2000. This index is called Schiller earnings ratio Index (Shiller PE).

At present, Schiller's earnings ratio is 35.7, which is higher than the highest price-to-earnings ratio of 32.6 times in the early days of the Great Depression in 1929 and is beginning to approach the high price-to-earnings ratio of 44.2 times earnings in early 2000.

The "20 rule" invented by Peter Lynch, another legendary investment guru, is that when the price-to-earnings ratio plus inflation equals 20 in the last 12 months, stock market valuations are in a fair range. The index has soared to 33.8, surpassing the record of 32.7 set in March 2000 during the dotcom bubble.

In addition, Bank of America Merrill Lynch analyst Michael Hartnett said that the US stock bubble is about to reach its peak, with US financial assets reaching 6 times the size of US GDP, and the Bull Bear Index rising further to 7.2 from the previous 7.1, indicating that the US stock market is currently in a serious overbought range.

RayDalio, founder of the Bridge Water Fund, also recently measured the US stock bubble, using six quantitative indicators to measure the extent of the bubble since 1910, which is currently at an all-time high of 77 per cent and 100 per cent on the eve of the 1929 crash.

There is no bubble that doesn't end up bursting.

"I can calculate the trajectory of celestial bodies, but I can't measure the madness of human nature. "--Newton.

The global COVID-19 epidemic in 2020 nearly punctured the bubble of US stocks, once staged the worst breakout in history, and then the Federal Reserve, on its own, reversed the trend of the collapse of US stocks and quickly recovered the lost ground of the crash-style fall. continue to refresh record highs, and become the engine of the global bull market, global investors continue to enjoy the binge of the bubble.

From March to May 2020, the Fed printed as much as $3 trillion, or 3.3 times the total ($900 billion) in the 200 years before 2008. In addition, data show that in 2020, the Fed issued the highest amount of base money in a single month, equivalent to the sum of 200 years before 2008.

The total volume and growth rate of the corresponding broad money set a record, an increase of 25% compared with the same period in 2019.

As a result, since 2020, the bubble in US stocks has been almost driven by dollar liquidity. Valuations contributed 27% and profits contributed 2% of the 29% rise in the s & p 500 in 2019, according to Tianfeng securities. In 2020, u.s. stocks rose 16% for the whole year, of which earnings fell 24%, while valuations increased by 54%.

Looking back at every bull-bear shift in the history of US stocks, there seems to be a common rule: the Fed "releasing water"-speculation + leverage-creating bubbles-Fed interest rate hikes-bubble bursts.

As a result, the bursting of the US stock bubble depends largely on the Fed's future policy movements.

At present, US dollar liquidity has not yet reached an inflection point, and the Federal Reserve is still dovish, deliberately protecting the market, maintaining the existing easing in the short and medium term, and emphasizing that if it withdraws from QE, it will communicate with the market for a long time in advance.

President Joe Biden announced a more than $2 trillion (13.1 trillion yuan) infrastructure and economic recovery plan on March 31, local time, after Biden unveiled a $1.9 trillion stimulus package that paid $1400 directly to most Americans.

It means that the pace of "releasing water" in the US continues, and the loose liquidity environment may still support the continued bubble of US stocks.

But under the bubble orgy, keep a sober mind. Because there is no bubble in human history that does not end in bursting, and it is only a matter of time before the Fed ends its "release".

In early March, Guo Shuqing, chairman of the Bancassurance Regulatory Commission, clearly warned that he was worried that the bubble in foreign financial markets would burst one day. Now that the Chinese market is highly linked to foreign markets, foreign capital continues to flow in. From the perspective of the most important external factors affecting the domestic stock market, the biggest potential bearish for A-shares this year may be the collapse caused by the bursting of the US stock bubble.