Paul Dietrich, Chief Investment Strategist at B. Riley Wealth Management, warns that the S&P 500 could potentially drop by half if a stock-market bubble bursts and the US economy falls into a recession. He argues that stocks are significantly overvalued, citing high price-to-earnings ratios and a low dividend yield. Dietrich attributes recent market gains to investor excitement around a few tech stocks and hopes for Federal Reserve rate cuts rather than strong corporate earnings. He compares the current AI hype to the dot-com bubble and points to high gold prices as a sign of investor caution.
Dietrich predicts prolonged high interest rates and tax increases will lead to an economic downturn. He forecasts the S&P 500 could drop to 2,800 points, its lowest level since the COVID-19 crash. Despite his repeated warnings, the market and economy have yet to face major issues.
