Like to use stocks as an investment tool? Well you've got about 25 years until it all comes crashing down, according to a new research report.
Klaus Grosby, a Finnish economics professor and researcher from the University of Vaasa, sounded the alarm in a recent paper called "Armageddon of Financial Markets: Is the U.S. equity market eventually going to collapse?"
In the paper, Grosby says that U.S. stock growth is unsustainable and is destined to crash by 2050.
"A well-established fact, documented in the physics literature, is that faster-than-exponential growth is not sustainable in the long-term and will eventually result in what physicists typically term a "finite-time singularity," Grosby says in the study.
Using predictive models, Grosby says there is a "95% confidence interval" for the devastating market crash to occur sometime between December 2043 and December 2050.
Modeling Armageddon
To come to this conclusion, Grosby analyzed monthly S&P 500 data between January 1871 and November 2022. He also added in daily data from the S&P between January 2, 1980 and December 31, 1986 as well as daily data from the Dow Jones period between June 1, 1921 and December 31, 1928.
He then used a "simple power-law model" for financial log prices and calculated away.
Beep, bop, boop ... his equations led him to the finite-time singularity of total implosion by 2050 at the latest, with different models showing "virtually indistinguishable" results despite using different data, different samples, and different estimation approaches.
