Financial markets are experiencing one of the longest advances in history, making global investors concerned about whether the bubbles have appeared or not.
Yesterday, managers of Goldman Sachs - one of the world’s most powerful banks - unambiguously expressed their worries of the extreme bullish move of global financial markets to the audience in a business conference in Frankfurt, Germany, hosted by Handelsblatt. This reflected investors’ increasing doubts that whether the current long rise nearly comes to an end or will continue. Many stock indices are about to approach historical record highs, however, a large number of securities on the debt market are traded with negative returns in addition to the real estate market’s bubble looming.
Market cycle theories demonstrate that the “bull” cycle normally lasts about five years before turning into a flat range or a downtrend. The current uptrend we are observing began about nine years ago and is one of the longest bullish trends in history, leading to a worrying issue that a whole generation of bankers growing up during this time has constantly worked in the rising market conditions, suggesting that they have less experience to work when markets start to fall.
Notably, the concerns about an upcoming financial bubble were expressed by the top managers of investment banks who have been extremely adept to cope with economic crises. And the fact is that until deciding to publish to their customers, they had already been getting rid of assets in all likelihood.
Goldman Sachs is considered the top of top-tier global investment banks for a reason: in history, it has been involved in a string of major financial scandals, including manipulating LIBOR rates, stock prices, front-line trading of retails investors, etc. Nevertheless, this bank always jumped out the water dry. Why? The answer is that former employees of Goldman Sachs hold key posts in almost all financial departments, not only in the US. Four out of eight US Treasury’s secretaries have before worked for this investment bank, in addition to three senior officials of the Federal Open Market Committee (FOMC). Besides, it’s obvious that ECB’s Mario Draghi was also from Goldman Sachs. This has formed a web covering global financial performance, allowing the bank to solve easily any issues in its favor.