Bank of America Warns of a Growth Stock Bubble: Is the Market Headed for a 40% Drop?
POINT Bank of America (BofA) warns that US growth stocks are in their third major bubble in 60 years, comparing it to the "Nifty Fifty" and dot-com crashes . Market concentration is at extreme levels , with the top five S&P 500 stocks making up 26.4% of the index . If the bubble bursts, the S&P 500 could decline by up to 40% , according to BofA strategists. BofA suggests investors diversify and focus on quality stocks to protect their portfolios. 1. Is the Stock Market in a Bubble? Bank of America’s latest research highlights a dangerous level of market concentration , suggesting passive investing and AI-driven enthusiasm have created a fragile market. 📊 Key Warning Signs from BofA US stock market dominance is extreme : The market cap of US stocks relative to global markets is 3.3 standard deviations above historical norms . S&P 500 concentration is at record highs : The top five stocks now make up 26.4% of the index , an all-time high. "New economy...