Trend among short sellers points to poor prospects for 2024 - financial experts warn of parallels to the 2007/2008 financial crisis.

Trend among short sellers points to poor prospects for 2024 - financial experts warn of parallels to the 2007/2008 financial crisis.

According to a report by www.wallstreet-online.de,

The coming year could be difficult for the stock market given the current trend among short sellers. According to a study from the University of Utah, patterns that were observed 15 years ago before the financial crisis are emerging. The current short selling percentage is well above trend and suggests poor prospects for 2024.

Looking at developments on the capital markets over the past year, the uncertainty caused by high inflation, the interest rate turnaround and geopolitical crises is noticeable. Many stock market investors are hoping for a more stable year in 2024 with rising prices. However, current short selling trends indicate that these hopes may be dashed.

Finance professor Matthew Ringgenberg finds in his study that the current short selling rate relative to the general trend provides good predictions for future price developments. Studies from other universities confirm the statement and show that this indicator allows for more accurate forecasts than others. Ringgenberg emphasizes that the further the current short selling share is above the trend, the more likely short sellers are to expect prices to fall. The proportion is currently well above the trend and follows a similar pattern to that before the crises of 2000 and 2007/2008.

From a financial perspective, this is a warning signal that indicates a possible loss of value in the stock market. Investors and investors should keep a close eye on developments and adapt their investment strategies accordingly. The current uncertainties and warning signals require a cautious approach.

It remains to be seen how the situation will develop in the coming months. Short selling can be an important indicator of potential market changes and investors should therefore keep an eye on current developments.