"The stock price generally goes up about 7 percent a year for the long term. It didn't go anywhere since October 2007 and the result of that is we're just now breaching that. We have had no growth in stock prices for years."
- Alan Greenspan, Former Federal Reserve Chairman
While American retailers lure shoppers with Black Friday deals and analysts are calculating potential benefits for the economy, U.S. stocks are rising, logging record highs day by day. Stocks have been rising since the beginning of 2009 and even political disputes, government shutdown and earlier sequester were not able to limit these gains. Constantly rising prices may lead to a bubble, posing high risks for the economy.
Hence, Marc Faber, Marc Faber Limited managing director pointed out there is a massive speculation bubble on everything starting from stocks and bonds to bitcoin and farmland. He believes investors will be disappointed with long-term returns, and, according to his estimates, a correction was already overextended when the S&P 500 index surpassed 1,600. Nevertheless, the benchmark index has already risen up to 1,808 points last week.
In contrast, Federal Reserve former chairman Alan Greenspan sees no risks of a growing bubble in stocks, as they have not seen growth for years since the 2007 collapse. Even with a rise in equities, the world's largest economy is suffering from global uncertainty that is reducing investment inflow. Greenspan predicts 2014 expansion to be around 2%. The figure is below the average estimate for a 2.6% growth next year, following a 1.7% expansion this year.
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