Part 3/7:
At present, the Cape Ratio hovers around 38.38, indicating that stocks are considerably overpriced; a 50% market drop could severely impact retirement savings and the financial stability of countless investors. It raises the question of what is fueling this remarkable overvaluation.
Contrary to sustainable economic growth, the current market dynamics are underpinned by heavy speculation funded by debt. Government interventions have resulted in an influx of cash in the market, which has obscured the reality of economic stability. At the same time, collective human behavior changes have led investors to accept rising prices without questioning profitability—conditions that are inherently unsustainable.