The risk of a crash in stocks is increasing rapidly

Dusseldorf Rising prices in Europe and much more rapidly rising prices on Wall Street have pushed equity valuations higher. The reason for this is that companies could not increase their profits as their share prices increased.

While corporate profits in Europe, including Germany, and the US rose to record highs in 2021, valuations are cause for concern, especially with a view to the next twelve months. Because in 2022, profits are unlikely to rise to the extent that the high stock market prices suggest.

According to the Deutsche Bank’s chief strategist Ulrich Stephan, a good 80 percent of the latest rally in the world’s most important stock market index, the American S&P 500, since the beginning of October can be attributed to the expansion of the rating. This means nothing other than that stocks have become more expensive because profits and forecasts are not keeping pace with a view towards 2022.