A 20% market correction (crash) might have already started?
So many kings of Gloom and Doom had been predicting a market correction or crash for a while. Marc Faber even predicted a 20-30% correction, though he lately changed his mind and said in short term the market would continue to rise. After a while, people stopped paying them any attentions.
However, recently three of the respected financial experts who had predicted the 2008 market crash - Raghuram Rajan, Robert Schiller (2013 Nobel winner in economical science) and Robert White had given warnings again on the stock market.
When they say the market is unpredictable, that means it cannot be predicted with any degree of certainty. So why try. You will be wrong as many times are you will be right. You don't need to be able to predict the market if you have a long time horizon.
If you are afraid of big corrections then diversify out of the stock market. Lots of ways to make money out of the financial markets. I sleep fine as I only have 28% of my net worth in the stock market. I may bring that up to 33% or maybe even 40% but never have a majority of my money in it. I am waiting for those good old days when I can get a 5% government bond.
MY biggest worry is terrorism, not recession. Recessions come and go. What happens when they detonate dirty bombs at the same time in Washington, and NYC.
I wonder how many of you noticed that Italy is now in another recession after its GDP was negative for two consecutive quarters. Not just a recession, but a triple dip recessions, after its economy started shrinking in 2008, relapsed in 2011 and then now again in 2014. Now France in the brink of another recession. Who will be next? Portugal or Spain?
In a CNBC article just came out 1 hour ago "Japan shows sharp contraction in second quarter"
Its GDP sharnk an annualized 6.8% in the three months ending in June.
This happened despite their QE with which they dump large amount of paper money into their economy.
Now it does appear that US may have one of the better economy comparing with others, or do we?
What will happen after our own QE ends on October?
Europe is a mess. The EU one currency experiment is showing its warts these days in terms of how weaker Euro economies cannot compete with the stronger ones using the same currency standards. Also, the Russia sanctions will do as much damage to Europe as to Russia.
Japan is its own special train wreck. Abe's three arrows will all end up doing a 180 degree turn and piercing the Japan economic health in the end. Salaries are not raising but inflation is taking hold, especially with energy. Good bye Japan.
Earlier in another thread we were discussing the possibility of a 20% market crash in a single day and clrodrick said if that happened they might simply halted trading and declared the rest of the day a holiday. I do agree that is quite possible. Like for NASDAQ which as a bunch of trading halt codes (not kidding) and T5 is:
"Trading has been paused by NASDAQ due to a 10% or more price move in the security in a five-minute period."