Vanguard’s chief economist Joe Davis said investors need to be prepared for a significant downturn in the stock market, which is now at a 70 percent chance of crashing. That chance is significantly higher than it has been over the past 60 years.
The economist added, “It’s unreasonable to expect rates of returns, which exceeded our own bullish forecast from 2010, to continue.” In its annual report, the company told investors to expect no better than four to six percent returns from stocks in the next five years. Vanguard, which manages roughly $5 trillion in assets and is a proponent of long-term investing, isn’t sounding the alarm bells to scare investors out of the market. They simply want investors to be prepared.
“The risk premium, whether corporate bond spreads or the shape of yield curve or earnings yields for stocks have continued to compress,” said Davis. “We’re starting to see, for the first time… some measures of expected risk premiums compressed below areas where we think it can be associated with fair value.“
‘The Great Crash of 2018’ will start in the deeper, darker depths of credit market – strategist https://t.co/DaGVSlSVqn pic.twitter.com/DQdUpPtzH1
— RT (@RT_com) November 19, 2017
According to RT, Davis also said that overreaching is no better a solution for a lower-return environment than getting out of the market entirely. He expressed worries that after hearing of “lower returns,” some investors will view that as a catalyst to become more aggressive to generate the returns they have been used to in recent years.
“You need to stay invested, because of lower expected returns,” Davis said, adding “Don’t become overly aggressive. The next five years will be challenging, and investors need to have their eyes wide open.”
Just ten years after the 2008 financial crisis “very little has been really fixed,” and the next bubble is about to burst, says Bill Blain, a strategist at Mint Partners. According to Blain, this time, it is the bond markets that will trigger the mayhem and collapse. The 2008 crisis, which was about consumer debt, was triggered by mortgages. We still have a consumer debt crisis problem ahead, warns Blain, but the next financial crisis is likely to be in corporate debt.
“I’m convinced bond markets are the REAL bubble we should be watching, and it’s going to start in high yield…” Blain warned.
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One of my favorite quotes is
“Meh”
Meh too!
“Those who don’t know history are destined to repeat it.”
– Edmund Burke
The public schools replaced “history” with Social Studies, so it is safe to assume most Americans are not aware of this.
Goldman: The Last Time This Happened Was Just Months Before The Start Of The Great Depression
“… one would have to go back to some time in early 1929 to be looking at the kind of returns that a balanced “60/40″ portfolio is generating today.”
ht tp://www.zerohedge.com/news/2017-11-28/last-time-happened-was-few-months-start-great-depression
I guess not having money does relieve some stress for me. Soon a lot of folks with fancy cars and homes will be in a real pickle! I will not feel so alone. God Bless, James
James..You are not alone
For sure James. But it’ll be from all walks of life that are in a pickle. Nobody will escape unscathed.
James, I’m debt-free so all my spare money goes into preps. I’ve never been allowed to get any type of loan or credit card. Everyone with any kind of debt will be in a pickle but not me. I damn sure don’t care about credit now at this late stage of the game. If anyone’s working on getting out of debt keep at it. I just keep stacking and praying.
I think now would be a great time to invest my entire life savings in Bitcoin.
Mo’ ammo.
A sudden drop will catch many by surprise.
Today shopping in the grocery store, tomorrow standing in the food line– a sudden shock from the sudden drop.
Never invest in anything that you can’t put your hands on.
Diversify….stocks,cash,gold, silver, food, real estate, and of course guns.
I don’t know enough about Bitcoin to invest, so I stay out of anything I don’t understand. Seems if you can’t see it or hold it or exchange it at a local business, it might not be safe enough for me. Just sayin’…
Let it crash. I work like a mule, pay my bills, eat cheap, live cheap, sleep lousy. Rinse off and repeat. I’d relish being able to put forth my life’s efforts to create my own idea of a good life rather than spending my days fixing the good lives up for the wealthy just to get by. So, yeah – let it all come tumbling down and let the rich have to fend for themselves. Sure’d be nice to see those priggish bast*rds who I swear I’ve no idea of how they got the money they have be forced to sweat, bleed and have to do for themselves.
Been hearing this for years now.
Oh boy, same old drum-beat
All market bears have been domesticated by the FED. Move along, nothing to see here.
I’ve been pretty much out since Feb 2017 jumping in with relatively small amounts very selectively and selling just as quick. Needless to say I seen the fall but didn’t understand (lack of formal education) the possibility of the tremendous rise when money is created at will and backed into equities. I have zero faith in the integrity of the financial system and for me its no time to jump back in. Even those “in the know” don’t know.
oops 2007 not 2017
It’s possible, anything is, but I’ve read many articles about imminent stock market crashes and national financial collapses for the last 10 years. To me, the individuals that have been writing all these dire articles over and over again since then have proven to be false prophets. Some writers even stated mad max type collapses would occur within weeks if not days. If a person makes enough predictions then sooner or later one will happen. This does not make him (or her) a seer, it’s just arithmetic.
The problem is that a person who keeps making wrong predictions loses credibility, or most readers must have short memories. Or else it doesn’t matter because it appears a lot of readers like to read about economic catastrophe, more than a few wish for it. If/when it comes, well, then it happens, it’s best to be just prepared. These type of articles have proven to be merely sensationalist.
Use your common sense. Stock market has a 0% chance of crashing right now. Until the day when the USA announces cuts to entire fiscal year total budgetary spending, the stock market will go up along with the national debt. Did the US GOVT make such an announcement? NO, and they never will. If an act of God, or the end of cheap energy, or an act of war occurs you will “may” get a crash. As long as the US keeps spending new debt it can endlessly create there is no number too high for stock exchange prices.
Unless of course a massive amount of loans default. If happened a decade ago.
20-25% of all loans at many banks in the EU are non-performing AND exceed their capital; meaning that for all intents and purposes the loans are in default and those banks are insolvent.
Deutsche Bank is a dead bank walking.
In the US a major correction is likely as all of the indicators point to it; as I described several years ago here, but I also believe that a real crash may not develop while rates are this low and the banks are urging consumers to borrow, borrow, borrow.
Unless rates rise constricting the money supply, the party is likely to continue for a bit longer. The PTB cannot afford a crash with war looming between the US and NK.
I told this community years ago that it was more likely that the global crash would come from China or the EU. I still think so. 🙂
Kevin2, the only thing I could default on would be my prepping. No loans or credit cards for me since I’ve never been allowed to “play the game”. I’ve always heard it said that the financial system doesn’t like people to be debt-free. I have to laugh at that because I’ve always been told I’m not ‘credit worthy’. How the hell can anyone say that without letting me play the game first and see how well I play it first? Man, talk about premature judgment.
WARNING: meh tinks master needs sponsor clicks so he can buy shoes for xmas
I block all ads and images. I use a facility in Firefox; about:config to throttle a lot of unwanted traffic.
I’m on Satellite and very data limited. I don’t have much to click on. I’m pretty sure most guys here know all the tricks.
You want him to do all this work for nothing? That sounds like socialism.
Still waiting for Dumbass Snyder’s prediction of the economy absolutely crashing by the end of 2015. I still like a few things on this site, but the fear porn Queens got old a looooooong time ago.
There seems to be no safe haven. Gold, silver, real estate, bonds, art, etc. will all be hammered by an economic crisis. I’m just wondering where I will get beat up the least.
The stock market is at an all time high not because congress has done squat, rather congress has done nothing for over a year now.
On the contrary President Trump has done huge things. He has reversed most of Obama’s pen and phone crap that Obama intended would hurt America. Trump has given American business a chance to compete. That is why the market has risen.
Most of congress is up for election next year, Trump has three more years. Congress needs to bent a knee or lose. Republicans seem willing to lose their house majority over their hate for Trump/ or is it the American people they really hate? The sheeple see this for the fraud it is.
The next election is going to be very interesting.
Let me add, congress knows they are up for election next year, regardless they are so invested in their coup agenda that republicans and democrats are willing to join together and lose seats to continue their overthrow of the US.
This is frightening. Keep on prepping folks, plan on hiding a bunch of your preps.
“The sheeple see this for the fraud it is”.
The sheeple don’t see anything. That is why we
have Democrats in positions of power.
I’m not a sheeple, I’m a survivor, a newly
educated 4GW advocate, planing for the worst,
and praying for the best for our country.
We all prep for the zombie apocalypse the Democrats and RINO’s have planned.
I read the history of fascism in pre WW2 Italy. The Italian parliament did exactly what this congress is doing, obstruct an block, to the point of choking the nation. They did this to the point it brought the Italy to its knees. Italy lacked a concerned citizenry.
Wikipedia has a great article on Fasism and how the pre war parliament in Italy purposely brought the nation down, so the fascists could take over. It was a coup long planned. Supported by the established media and inaction by the major parties in Italy made it happen. The fascists in Italy believed democracy weak and purposely attacked it through political inaction, distraction, and overthrew it. The parliament failed to fund government, they overtaxed the people and squandered the money. The Italian parliament purposely left the government in debt and bankrupt as part of their plan.
Italy however lacked a strong leader like D J Trump.
This is getting interesting.
Doooommm!!!!
it’s all comin’ DOWN soon has MY vote.
Good!
…and yet, nothing will happen. It won’t crash because the whole “system” is completely gamed.
Trust me, when the market does “crash”, even this author will be the last to know. And we don’t even have the definition of a crash, which could be something as small as 5%. If you can’t afford a small hit, you should cash out now. Most of us can survive a small hit because prices have typically rebounded in short order. I lived through the 30% drop back in 87. When that occurred it was the best time to buy.
Predicting the stock market will crash is easy. Yes it will crash.
Predicting when is a different story.
It crashed several times in the past 10-15 years.
People need to define what they mean by crash.
Stock market always goes up and down…