Every other month I like to update and revise my Bubble-Trouble Outlook for the year. It's an in-house composite of heavily overvalued global markets, including asset classes, that have risen to absurd levels with no justifiable fundamentals supporting values.

For 2007, I'm still forecasting a crash or at least a severe bear-market for Indian shares.

Stocks in India have risen more than threefold since 2002 and now trade at nosebleed multiples. In fact, despite all the hype surrounding India lately, the stock-market today trades at the same level compared to last November, meaning, an investor has gone nowhere over the last six months in Indian stocks. Making matters worse, inflation is climbing and the Indian central bank is still hiking interest rates -- a perfect storm for a major market decline. India is in the early stages of a classic liquidity squeeze, but most investors don't realize that, at least not yet.

Gambling stocks are another mania now in full-bloom.

Though I agree with the long-term earnings picture for casinos and resort operators in gambling meccas across the world, Macau is probably one of the biggest casino bubbles at the moment. Macau, for the first time, overtook Las Vegas as the world's biggest casino draw, claiming it has raked in more than $7 billion dollars in 2006. Although gaming revenue is increasing substantially in Macau, supply growth of new hotels is currently outpacing demand by a factor of 2-to-1, a very bearish sign. If I was a trader, I'd short Macau gambling stocks -- all trading at all-time highs.

Traditionally high-risk and high-yield credit markets are another bubble about to burst.

Investors today are not compensated for owning junk bonds and emerging market debt. These markets used to be high-risk; but not anymore. There's barely any volatility since 2002. Credit spreads between high quality U.S. Treasury bonds and junk bonds are at their lowest in history -- the same is true for emerging market bonds, which yield just 6.39%, or 1.73% above T-bonds. Junk bonds now yield an average 7%, or just 2.34% above T-bonds. At some point, we're going to suffer a major hedge fund crisis, probably in the credit market, similar to Long Term Capital Management nine years ago. There's a huge concentration of carry-trade and leveraged positions in high-yield markets right now. I have no doubt this reversal will be swift and utterly violent.

So there you have it. Time will tell if I'm right about the above forecasts in 2007.