Please do not believe a word that I say beyond this point. Please look this up for yourself if you care about your investments and your financial future. Now to my point - The Dow Jones Industrial average finished the day at 17,828 today. My prediction is that it will be 30-50% lower in the next 12 months. Where would that put the Dow and why do I make such a bold/crazy forecast when we are at all time highs? If my prediction comes true the market should be between 8,914 - 12,480 entering 2016. So how could we get there from here? This is the easy part. This is mostly a fake recovery and a few simple things point to how the paper wealth will dissolve in the next 12 months. For the last five years the Federal Reserve has pumped in 4 + trillion dollars and kept our interest rates at almost zero (also called ZIRP en.wikipedia.org/wiki/Zero_interest-rate_policy). These efforts (4 trillion, low interest) paired with corporations and banks leveraging cheap money to buy back their stock has taken our markets to all time highs. At some point something has to improve (employment, earnings, economies around the world etc). in order for this market to go higher and just the opposite is occurring (Japan is buying 100% of their debt, Russias currency is crashing, Chinas real estate market and GDP are slipping and the EU is working on their own version of QE....oh, and the demand for oil is falling (usually an ominous sign). So why do I write about this since what ever is going to happen will happen anyway. I am tired of seeing main street (a term used to describe non professional investors) get fleeced every 5-7 years (normal boom and bust cycle for the US - en.wikipedia.org/wiki/Business_cycle). So I am on the record with my warning. I am either going to look foolish or brilliant in 12 months. Either way, I feel good about warning my friends about what I believe to be in the works. Again please do your own homework and invest some time into your financial future. How do you do this? Ask your broker about the possibility of a stock market crash based on these points. Ask them for a plan in the event of a sudden 10%, 20%, 30%+ drop in the market. Cheers and best of luck to you.
Posted on: Sat, 29 Nov 2014 04:43:31 +0000
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