The Stock Market Doomsayers
Run for cover, batten down the hatches, and get in cash. The “armageddonists” have us surrounded according to a recent J.P Morgan report, but does it really pay to heed their bearish advice?
For as long as free markets are mixed with the human drive for more, more, more, the world will suffer occasional crises. Fear and greed will forever take turns, and we’ll never learn. Central Banks and legal decrees even exist to shepherd investors’ emotions, but the world isn’t static, and new loopholes are an unavoidable by-product of human progress. So, when it comes to high-profile recession predictions, that means you can’t lose.
Or does it? On May 20th, 2010, American economist Nouriel Roubini claimed global financial markets were at risk of a “double-dip recession.” If you listened to this “expert,” sold your shares, and stuffed the proceeds in a sock, you’d be 60% poorer today than everybody else.
Even as recently as 2016, tip-offs from billionaires George Soros and Carl Icahn about a “complete meltdown,” “a massive bubble,” and “tremendous problems ahead,” would have you 35% behind the pack. According to J.P Morgan, a 35%-45% market cratering would be needed to reverse those regrets. So, time the market at your peril!
Many investors like to ring-fence money on the off chance that their favorite companies suddenly go on sale. Others have learned to take temporary market setbacks on the chin, dutifully topping up into their portfolios every month, rain or shine in the markets. One fact remains, however. If and when a recession hits, we’ll all be tested on why we bought what we bought. Pick wisely!
