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How to spot bubbles within the stock market?

By April 3, 2014No Comments

Following is an interesting chart to spot bubbles within the stock market. Any time a sector’s weighting goes above 20%, it could signal trouble ahead. There were three instances since 1974 when the sector weightings for Energy, Technology and Financials exceeded that threshold and cause a bubble.

Sector Composition of the S&P 500 by Equity Capitalization, 1974-2014