Next Stock Market Crash Prediction Is Based On Hype & Hope

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Next Stock Market Crash Prediction
Updated July 2020

The next stock market crash prediction?

The market will crash, but not before all the naysayers and Dr’s of Doom will lose their pants and their nickers first or at least ensure that the clients that listen to them do so.

The more pertinent question is when will the markets crash.  Should we panic over a stock market crash? A Market crash which is a correction as the term crash usually applies to those who jumped in towards the tail of the bull market. Before we examine the issue of when the Stock Market will crash, let’s just remember that a stock market crash is nothing but a buying opportunity from a long-term perspective.  So will the stock market crash and if yes, when this will occur? According to most experts, the market is ready to crash today, tomorrow or it should have already crashed.  Do you really want to rely on such faulty advice?

Article of Interest: Is the Stock Market going to crash

Jim Rogers next stock market crash prediction 

Jim Rogers, one of the co-founders of the Quantum Fund with George Soros, is becoming increasingly bearish as he feels that the financial system is due for a shock. In Fact, he went on record to state that the Fed does not know what it is doing on Bloomberg TV.   “A $68 trillion ‘Biblical’ collapse is poised to wipe out millions of Americans”, said Jim Rogers. Should the masses panic and listen to these statements; we will answer that shortly. For now, let’s look at what other experts are stating.

Dr Doom; the broken record on The Next Stock Market Crash Prediction

Here’s Marc Faber’s next stock market crash prediction. Keep in mind if you are going to follow this dude’s advice you better take it with a bottle of whisky and jar of salt. He feels that the markets are destined to crash. If you had listened to chap, you would have been blown out of the markets a long time ago.  Jim Rogers has made some pretty good calls in the past; Mark Faber, on the other hand,  very few; treat him as a source of entertainment.  He went on CNBC recently and made the following claims

“I believe the time will come when the weakness of the euro becomes uncomfortable for the Europeans, specifically the Germans, and then there will be a reverse,” Faber said. “And the dollar will go down, and the money that flowed into U.S. assets will flow out of U.S. assets, and so the market is more likely to go down.” CNBC

Carl Icahn Thinks we are heading for a disaster too 

Carl Icahn another well recognised financial expert recently made the following comment

 “The public is walking into a trap again as they did in 2007.”

Many experts think that the stock market is overvalued by at least 50%. Moreover, they feel we are about to face a crash of historic proportions

Andrew Smithers the chairman of Smithers and Co. stated

“U.S. stocks are now about 80 per cent overvalued,” he backs this assertion with the claim that the current conditions match those of 1929 and 1999.

Kendrick Wakeman, of FinMason states

“If you look at the market historically, we have had, on average, a crash about every eight to 10 years, and essentially the average loss is about 42 per cent,”

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Will the Stock Market Crash Topic is A Redundant & Irrelevant Topic

The focus should be on what to do when the stock market crashes. One day it will crash and will you react in the same way or will you change course. The Tactical Investor, on the other hand, has gone on record time and time again to state the experts have it wrong since 2013.  One day the markets will crash, but, that time is not upon us yet.

Mark Mobius, views market crashes through a positive lens

We agree with this stance and this is something we at the Tactical Investor have been doing since our inception. He recently appeared on CNBC and made the following comments on  Russia

“Russia is very cheap,” the storied emerging markets investor told CNBC’s “Street Signs.” “The problem is the sanctions. Many of us cannot invest because of the sanctions. Once sanctions are released, then the market is going to do very well.”

Article of Interest: What happens if the Stock Market Crashes

Sir John Templeton one of the greatest Global Stock Pickers of all-time views on Stock Market Crashes

“If you want to have a better performance than the crowd, you must do things differently from the crowd.”

 “Invest at the point of maximum pessimism.

“Bull markets are born on pessimism, grown on scepticism, mature on optimism and die on euphoria.

Jack Bogle former chief of the Vanguard group

Many naysayers will go out of their way to Twist Bogle’s recent comments on CNBC:

He stated that the crowd should prepare for two declines of 25%-30%, maybe even 50% in the coming decade.  The host Scott Wapner made the following comment:

For a buy-and-hold guy, that is a little concerning, don’t you think?”

Bogle Calmly replied

“Not at all. They come and go. The market goes up, and the market goes down. It is never failed to recover from one of those 50 per cent declines.”

 

Free Market Forces No Longer Exist

Free market forces ceased to exist a long time ago. What we have now is the illusion that the markets are free, but they are not; all the data is being manipulated. Fear is the emotion the top players use to stampede the crowd and fleece them of their hard-earned money. The top players never work hard, they live off your sweat. Understand the game, and you can use this to your advantage.  Stock Market Crash 2017 or stock market crash 2016, the story is the same; only the packaging changes. Don’t follow the masses for they have an uncanny knack of doing the wrong thing at exactly the right time

Look At These Flawed Views  on stock Market Crashes

Crashes can lead to a bear market. That’s when the market falls 10 per cent beyond a correction for a total decline of 20 per cent or more. It typically lasts 18 months. Bear markets occur with a recession.

A stock market crash can cause a recession. How? Stocks are how corporations get cash to grow their businesses. If stock prices fall dramatically, corporations have less ability to grow. Firms that don’t produce will eventually lay off workers to stay solvent. As workers are laid off, they spend less. A drop in demand means less revenue. That means more layoffs. As the decline continues, the economy contracts, creating a recession. In the past, stock market crashes preceded the Great Depression, the 2001 recession, and the Great Recession of 2008The Balance

From Wikipedia

stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes[1] are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles.

Stock market crashes are social phenomena where external economic events combine with crowd behaviour and psychology in a positive feedback loop where selling by some market participants drives more market participants to sell.  Other aspects such as wars, large-corporation hacks, changes in federal laws and regulations, and natural disasters of highly economically productive areas may also influence a significant decline in the stock market value of a wide range of stocks. All such stock drops may result in the rise of stock prices for corporations competing against the affected corporations. Full Story

Article of Interest: Nasdaq crash reality or Hype 

From  The Street

Stock market crashes are an unfortunate fact of life on Wall Street, with eight major market crashes in the past 100 years, led by the stock market crash of 1929. That stock market crash triggered the Great Depression — often cited as the worst economic period in U.S. history.

Stock market crashes occur after significant and rapid declines in the stock market over a short period of time — even in one day, in some cases. Any one-day market decline of 10% or more in a single day is generally described as a market crash. A steep market decline on a key index, like the Dow Jones Industrial Average or the Standard & Poor’s 500, is usually followed by panic selling by investors, sending the stock market into a deeper spiral. Full Story

Tactical Investor ViewPoint On Market Crashes

Forget the Market Crash Angle and focus on the Opportunity Factor

The smartest thing to do if the stock market crashes in 2017 or any other point in the future is to keep calm. Learn from the previous masters and don’t follow the masses.  At the Tactical Investor, our motto is simple; the trend is your friend everything else is your foe. We are strong advocates of mass Psychology and technical analysis. Mass psychology clearly states that the masses will always be on the wrong side of the markets; if you want to win then buy when the crowd panics and panic when they are happy.

One would think that the masses would learn from history, but sadly, they pay no attention to history. They are animals of instinct that only react and the main emotions they listen to are Joy and Panic.  Sit on the sidelines when you feel that your emotions are about to get the better of you; in the financial markets, a hot mind is a dangerous mind. You need to be calm, cool and collected before you decide on a course of action.

Is the Market Poised For A crash

The average trader has a convoluted view of the markets and the world. They are forever willing to bend the definition of risk and opportunity to suit whatever perspective is taking the lead role at the moment.  When prices are low, they assume that it is the wrong time to buy because they are bound to go lower, and when they are soaring upwards, they assume that it is the right time to buy because they are bound to soar even higher. The concept of risk to reward is thrown out of the window; they state they seek an opportunity with low risk, but their actions speak otherwise.  No Bull Market has ever ended on a note of fear; they end when the crowd is in a state of ecstasy

One needs to understand the difference between a battle and a war. You can lose several battles but still win the war, or win many battles and still end up losing the war. It comes down to how much damage you incur as opposed to losing or winning the battle. If you minimise the damage, you can lose several battles in a row, retreat and regroup and come back and win the war. Feb 2019 Update

 

The masses are far from happy as can be seen from the above two gauges and until they embrace this bull market, every sharp pullback should be embraced; the stronger the deviation the better the opportunity.

Stock Market Crash Outlook Update

Now given the intensity of the current sell-off, the markets are likely to mount a rally, the first attempt usually fails, and if history is to be trusted then when this rally fizzles out, it should lead to another downward wave, that could take the market to new lows on an intraday basis.  If the pattern is strong enough, we could issue either a short term put play or open up strangle position. This is where one opens up both a call and put but with different strike prices.

Don’t forget to keep a trading journal; the best time to take notes is when blood is flowing freely on the streets.

Watch with amazement how the hysteria over the coronavirus disappears just as fast as it was created once the objective of lowering rates and approving multi-billion bailouts is achieved. The data on the coronavirus indicates that the high mortality rate is only applicable to older individuals and we are sure when that data is further examined, it will be discovered that these older individuals are not in the best of health. In other words, they probably have existing conditions.

 

The masses are far from bullish, In fact, they are downright panicking and therefore this blood-curling pullback has to be embraced with gusto. The stronger the deviation the better the opportunity. 6 months from the crowd will regret having through the baby out with the bathwater. March 12, 2020

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Stock Market Outlook July 2020

Now is an excellent time to sit back and dwell with how you felt back in March when the markets were crashing. At the Tactical Investor, we repeatedly warned our subscribers that this was a manufactured crisis and that the markets would recover. Fast forward that appears to have come to pass, we are roughly 3K away from Dow 30K, while the Nasdaq has already soared to new highs.  In the end crowd always losses; remember that the next time the experts state that markets are could crash and burn; the only that goes up in smoke are the egos of these shady experts.

This was the smallest bear market in history, and it was killed before it could even gather traction. As the trend is bullish, the plan is simple: Embrace all pullbacks ranging from mild to wild like a lost love.

let’s end on an interesting note; Monkey’s fare better than experts

In 2010, a Russian circus monkey named Lusha picked an investment portfolio that “outperformed 94% of the country’s investment funds” to great acclaim. Given 30 blocks, each representing a different company, and asked “Where would you like to invest your money this year?”, the chimp picked out 8 blocks. An editor from a Russian finance magazine commented that Lusha “bought successfully and her portfolio grew almost three times.” He suggested that “financial whizz-kids” be “sent to the circus” instead of rewarded with large bonuses.

 

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References

The Crowd, A Study of the Popular Mind: Gustave Le Bon, http://www.gutenberg.org/ebooks/445

Five warning signs of market euphoria, Investopedia, https://cutt.ly/rslGnYU

Impact of Mass Media Use on Youth. NCBI Resources, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2792691/

Homerun definition, The free dictionary, https://financial-dictionary.thefreedictionary.com/home+run

The pros and cons of mass media, Waldern University, https://bit.ly/2Egoq65

Why people lose money in the markets, The Balance,  https://cutt.ly/rslG1eK

Prepare for massive stock market opportunities, Market Watch, https://on.mktw.net/32QvqB4

What is mass hysteria, Medical News Today,  https://www.medicalnewstoday.com/articles/322607

Any Monkey can beat the Market, Forbes, https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-can-beat-the-market/

Random  Walk Down Wall Street, Burton Malkiel, https://cutt.ly/5slKVMl

How a cat & some Monkeys Outperformed experts, The Fool, https://bit.ly/2ZYQljy

Russian Chimpanzee outperforms 94% of Bankers, Dailymail.co.uk, https://www.dailymail.co.uk/news/article-1242575/Lusha-monkey-outperforms-94-Russia-bankers-investment-portfolio.html