Concerns are mounting over the possibility of a stock market crash reminiscent of 1929, according to financial journalist Andrew Ross Sorkin. During an interview with CBS News’ “60 Minutes,” Sorkin expressed his anxiety regarding the sustainability of the current market environment. As co-host of CNBC’s “Squawk Box” and founder of the New York Times’ DealBook newsletter, Sorkin has observed troubling trends that echo the prelude to the Great Depression.
Historical Parallels and Current Market Trends
Sorkin, who authored a new book discussing the 1929 crash, emphasized similarities between today’s economy and that of the “Roaring Twenties.” He remarked that from 1928 to September 1929, the stock market rose by 90%, a staggering increase that now feels eerily similar.
He stated, “I’m anxious that we are at prices that may not feel sustainable. We are either living through some kind of remarkable boom or everything’s overpriced.” This sentiment comes amid a significant rise in stock values, with the S&P 500 gaining approximately 13% and the Dow Jones Industrial Average increasing by 9% as of October.
Speculation in Technology and AI Investments
The recent surge in technology and artificial intelligence (AI) stocks has drawn Sorkin’s attention. He believes that current market dynamics reflect a speculative bubble. “I think it’s hard to say we’re not in a bubble of some sort,” he noted, indicating that the economy may be artificially buoyed by investments in AI.
- S&P 500: +13%
- Dow Jones Industrial Average: +9%
Sorkin explained that hundreds of billions are being funneled into AI industries. He cautioned, “This is either a gold rush or a sugar rush — and we probably won’t know for a couple of years which one it is.”
The Role of Deregulation and Modern Investors
Sorkin pointed to the Trump administration’s deregulation policies as potential contributors to market instability. He noted that ordinary Americans today are drawn into the markets under conditions reminiscent of the pre-1929 era, where risk is often disguised as opportunity.
“It’s not that we’re going off a cliff tomorrow,” he warned. “There’s an increasing amount of debt in the market today.” He highlighted that access to private equity and venture capital has continuously outperformed traditional investments, underscoring the disparity in market access.
Declining Market Protections
According to Sorkin, critical protections that were established post-1929 are currently eroding. He expressed concern over the diminished role of consumer protection agencies and SEC disclosure rules. “The Consumer Protection Bureau practically doesn’t exist anymore. That’s what concerns me,” he stated.
Additionally, Sorkin addressed the drive to democratize investing, which aims to open riskier markets to a broader audience. He warned that, while this trend could benefit some, it may ultimately backfire. “There’s a real push…to open up the market to more and more people,” he added.
As Sorkin’s book hits the shelves this Tuesday, his insights serve as a reminder of both the potential pitfalls and the fragile nature of the current stock market landscape.
