“A huge collapse is imminent,” warns longtime forecaster Harry Dent. He added, “This thing is going to be hell,” it could be “the biggest disaster ever” and the beginning of “the next big economic downturn.”
When? It seems that by the end of June, if not earlier. This is less than 10 weeks.
Dent’s prognosis seemed to strike some emphasis. For about a week or more, the article was the most popular article on ThinkAdvisor.com. But while he may be unique in setting a deadline, he is not the only guru who predicts disaster.
In a note from Jonathan Ruffer, Money Manager in London, he warned: “I take it for granted that the 40-year-old bull market is coming to an end and that it will be replaced by difficult investment times. And Jeremy Grantham (also born in England but long ago based in the United States) recently concluded that stocks, bonds and real estate are in a bubble and could collapse together in the next year or two.
The US stock market is almost 90% above the level at which the Warren Buffett Rule should trigger red flashing lights and deafening warning sounds. The so-called “Shiller” or cyclically adjusted price / profit ratio], Q of Tobin’s – all measures tell us some version of Alien’s Danger! The emergency destruction system is already activated! The ship will detonate in T minutes 10 minutes. “Run, don’t walk, to the rescue pod.
And most of the most upward predictions we hear from Wall Street include the simple misconception of double-counting: The more stocks rise, the better their “historical returns,” which the seller then cheerfully extrapolates into the future.
The more expensive the shares, the more attractive they are.
The bears had a lot of logic and math on their side. But most have predicted various recurrences of the Great Depression for most of the past 20 years. Not only in 2000 and 2007, which were good times to get out of the stock, but also during the rest of the time, which were not.
Over the past 20 years, a US index fund such as the SPDR S&P 500 ETF SPY, or the Vanguard Total Stock Market Index VTSMX fund, has increased your money many times over.
These forecasts are always guaranteed to generate a lot of attention. More importantly, fears of a market crash completely keep the vast majority of ordinary people out of stock. “In my daily conversations, I’m amazed at how many otherwise sensible people think not just that the stock market is risky, but that you can and will probably ‘lose everything.'”
It’s not that bull market traders are obviously right. In fact, math and cold hard logic should worry everyone, especially about America’s most euphoric stocks.
But even if these skeptics turn out to be right, when will it happen? Will the market increase by another 10%, 20% or 50% before reversing? Will it happen in June this year – or in June 2025?
But there are options instead of trying to guess Boom and Doom. Instead, we can simply let the market decide for us. Money moneger Meb Faber realized years ago that almost every stock market crash or bear market in history has been signaled in advance. If you just cashed in when the market index first fell below its 200-day moving average, you avoided almost all carnage.
Is this system guaranteed? Of course not. This includes all those bullish forecasts that stocks will bring you inflation plus 6% per year. And these bearish predictions that once the market reaches a certain value, it is heading for disaster. All rules rely on some assumption that the future will be like the past.
And using this rule means that you can safely and happily ignore all the people who predict the end of the world.
Junior Trader Mert Mustafa