People love bubbles. Children love to blow balloons and bubbles. As we get older, we love aerated chocolate. When we want to increase our financial condition, we go to the stock exchange. We are excited by the titles of articles in blogs “How I earned 40% per annum without special knowledge and experience” or something like that. They are written by brokers or arrogant beginners. We take money from banks because of low interest rates and go to the stock exchange where someone once earned 40%. We want to make 400% and retire at 35.

Few people understand that all this - and balloons, porous chocolate and a pension of 35 - is a soap bubble that with fatal inevitability crashes against the harsh realities of the stock market, in which those who usually win at the casino earn “without experience and knowledge” , i.e. professionals.

Yes, it happens that beginners without experience make money, especially in a growing market, because the first dose of a drug called "winning" in the casino is offered to you for free. Question: “If someone was able to earn money, why can’t I” - I am asked by dozens of quite confident people who have extra money that the market ruthlessly redistributes in favor of those who have special knowledge, experience and stock mind, suitable for playing on the stock exchange.

The difference between a professional and a beginner is that he knows when to stop, stop spinning the roulette wheel, sell his shares and go cash.

It would seem: what is easier to stop when the markets are overheated, although there are no visible reasons for their growth? Have we defeated COVID? Has the world economy recovered and interrupted supply chains for all the necessary goods have started working again? Or has inflation been taken under control by the world's central banks, including our valiant Central Bank of the Russian Federation, together with Rosstat? No, instead, we saw a massive spike in inflation around the world. Of all the possible scenarios, the most probable seems to be the stagflation of the 1970s in the United States - the stagnation of the economy, the decline in industrial production and unemployment, together with high inflation rates. Or in Russia in 1991-1996. I wrote about this back in the summer. Today, our glorious Ministry of Finance understood this and raised it to its ministerial shield.

The great economist John M. Keynes once said, "Financial markets can stay irrational longer than you can be solvent." This means that it is impossible to calculate the behavior of the market, more precisely, of large players (or the so-called smart money - "smart money"), more precisely, it is possible, but not always, not all and not all the time. It is to the sharks of the market that the savings of newcomers go, which they want to increase by investing in securities.

The second aphorism that comes to mind when analyzing the current market situation is “markets don't skyrocket”. It is a pity that no one believed in this in the United States in the late 1920s, when, under the leadership of Secretary of the Treasury J. Rubin, market participants inflated a real soap bubble that hit commercial banks in the first place, half of which out of 25,000 ceased to exist. Millions lost their savings, people were willing to work for a bowl of soup. As a result, the United States received a severe economic crisis, which went down in history as the Great Depression. The sad results of the crisis are known.

In 2018, I wrote about the feeling of déjà vu that arose—the feeling of the 2008 crisis. A year ago, the scenario began to come true: a “black swan” arrived in the form of a coronavirus pandemic and hit the economy.

In 2020, the economic recession in Europe amounted to 7%, in Russia - only 3.5%. The US Federal Reserve, the ECB and other central banks resorted to a tried and tested tool to alleviate the crisis - they began to flood the fire with money, dropping interest rates to zero and buying back bonds. Because they don't know anything else. so-called. "helicopter money" is setting the stage for new bubbles. We saw this after the dot-com crash in 2001, and after the subprime mortgage crisis in 2008.

History repeats itself. The NASDAQ is already very overheated, investors who understand this are dumping shares of Tesla, Apple, and others. Bitcoin soared above the $60,000 mark. The broad market index S&P500 is confidently holding around the 4700 mark - all this is reminiscent of 2008, complete deja vu.

Cheap money flowed into the markets, involving completely unprepared people into the number of investors, including the “network hamsters” of Reddit, who inflated the prices of a number of assets by tens of percent. Russian and foreign stock indices are setting new records, despite neither the recession in the economy nor the ongoing pandemic, which scares us with new, more contagious strains.

In Russia, the situation is especially dangerous: inexperienced investors, trying to find an alternative to a bank deposit, opened 5 million new brokerage accounts on the Moscow Exchange last year. The return on investments of "physicists" over the past five years did not exceed 5.4% and did not even exceed the return on bank deposits (5.97%), yielding to the average inflation rate for the period (4.2%, and now more than 8%). Few have earned, but many have lost even in a growing market.Is it worth it to try to jump into the last car of a departing train? Correction will definitely come, and sooner than everyone expects. And it is not a fact that the markets will recover quickly, do not forget about the lessons of the Great Depression - then it took the markets 25 years to return to pre-crisis levels.

Patterns repeat, don't they? But development is cyclical – the market rises to new highs and falls to lows.

Since the beginning of 2021, the yield on ten-year US securities jumped from a low of 0.91% to 1.56%, and a day later to 1.61%. The yield on them may well grow to 1.8-2%. It is strengthening following the optimism of investors who believe in a sustainable economic recovery and rising inflation as demand resumes. Even gold broke through a strong level of $2,100 per troy ounce, and this is not the limit. But the price of gold is the price of fear.

In such a situation, the yield on public debt will grow. It's not just the United States that is facing rising government debt yields. In contrast to the Federal Reserve, representatives of the European Central Bank are closely monitoring the dynamics of long-term bond yields, believing that they will remain favorable for the economy. Given that the ECB wants to raise rates much more strongly than the Fed, the recovery of the European economy could be greatly delayed.

Usually in such an environment, if financial markets are not fueled by fresh money and monetary policy tightens before the economy recovers, a market crash is inevitable. US congressmen voted in favor of a $1.9 trillion aid package for the US economy. So the banquet of distribution of profits will continue. Question: for how long? As you know, financial markets suffer from excessive optimism and try to grow 3-6 months before the real economic recovery. And what will be its trajectory? L-, V- or W-shaped? What will be the future of the global economy after the pandemic?

It is quite possible to agree with the opinion of the Financial Times that the beginning of 2022 could be the worst for the global bond market in six years. This conclusion was made on the basis of the Bloomberg Barclays Multiverse index, which tracks the market for debt securities of different countries with a total value of 70 trillion dollars. It has lost 1.9% since the end of last year on total income, which reflects changes in stock prices and interest payments. If this trend continues, the results for the quarter will be the worst since mid-2018, and the fall in the first quarter will be the strongest since 2015.

I believe this will sober up the mass stock investors and could very well lead to a deep market correction, if not a market crash, because trees don't grow to the sky. The question is no longer whether the crash will happen or not, but when exactly.

It is not yet clear where the next "black swan" will come from - new, more dangerous strains of coronavirus, the fall of the Chinese developer Evergrande and the resulting domino effect or something else, but one thing is clear - a collapse is inevitable, no matter what will be the trigger, and the time for the recovery of markets – is still out of the forecast.

This whole situation reminds me very much of the last attempts to grow the market in 2007 on the money of those who tried to jump into the last car of the outgoing train.

The author expresses his personal opinion, which may not coincide with the position of the editors.

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