Mario Lochner|22. Juni
Professor Hens warns: We are now really in this late stage of the rally
Introduction
In this interview, Professor Thorsten Hens, a behavioral finance expert, analyzes the current phase of the stock market rally. He warns that we are already in a late stage of a speculative bubble, but the party is not over yet.
Current Market Phase: Late Stage of the Rally- We are now in the phase of irrational exuberance – prices could still rise another 50 % or more before the party ends.
- Volatility will increase, making it harder to tell whether a downturn is final or just a correction.
- Momentum dominates – fundamentals show high valuations, but behaviorally the party continues. Hens’ algorithm currently favors momentum.
- The worst mistake is not being invested and sitting on the sidelines. The second worst: panic selling during crises.
- Entering now can be painful, with an immediate 10–20 % loss possible. Yet exiting before the final surge is also risky.
- Hens‘ rule of thumb: 90 % stocks + 10 % gold as a reserve – historically yields higher returns than 100 % stocks. Cash or bonds are less effective reserves.
- Historical data from 1972 to today shows: 90 % stocks + 10 % gold delivers the highest returns – even outperforming a pure stock portfolio. Gold serves as inflation protection and crisis buffer.
- Psychologically, selling gold during a crisis is tough, but that’s precisely when one should do it to profit from falling stock prices.
- When exaggerated IPOs arrive, we are “pretty much at the end” – but the crash doesn’t follow immediately. A needle (a simple calculation showing unsustainability) is still missing.
- The AI bubble shows parallels to the dot-com bubble, but with differences: Hardware (chips, energy) remains scarce, while software is hard to protect and disappointments loom.
- Major IPOs (SpaceX, OpenAI, Anthropic) indicate an advanced phase, but not the end.
- Geopolitical risks (e.g., Iran conflict) could prick the bubble if oil/gas supplies become tight. Markets typically dip before a war and recover at its onset.
- Sovereign debt in Japan and the US is not yet critical as long as debt service remains moderate. Rising interest rates due to inflation would be the tipping point.
- Consumer confidence is often a contrarian indicator: low sentiment suggests buying opportunities because markets are forward-looking.
Professor Hens maintains his assessment: We are in the late stage of the rally, but a strong surge (50 % or more) is still possible. Investors should not exit too early, nor jump in blindly. The proven strategy: 90 % stocks, 10 % gold – and stay disciplined.
