US and global stock markets recorded some losses lately. Nasdaq Composite is off by circa 4% from its recent levels. How deep will be the current stock market dip? Will it again come the time to buy the dip?
Yes. US stock markets will quickly recover again after the current fall. But not before the main US stock market indices fall approximately 15% from their recent highs.
The news headlines about the trade conflict between the USA and China will definitely change the fundamental value of stocks and US stock markets will dip further from current levels. But it is too early for the major recession that will cause US and global stock indices to fall by more than 30-40% from their peaks.
Many famous technology companies like Lyft, Pinterest and Uber have listed on US stock exchanges. But they do not make money, they do not exhibit net profits. Is this sustainable? No. No business can survive in the long run without making money. Tesla is a notorious money losing machine, but its stock is trading at nearly half its 383 USD June 2017 all time high. The reason for Tesla's languishing stock price is largely the company reneging on its promise to start making money, that is reporting net profits in the near future.
Apparently, we are in the late stages of a technology stock market bubble, but it is too early for the bubble to burst yet. Most probably, after the highly likely Donald Trump Presidential reelection in 2020 the US government could lift its hands from the steering wheel and stop propping up the economy. This of course, will not be the decisive factor, but a catalyst. Much more the leverage inherent in the global financial system today will play its rule in bringing down major global stock market indices 30-50% in several years. China, the US and Europe are all overleveraged. Sooner or later this ticking debt time bomb will burst.
But not yet. The current US stock market correction will be a shallow one - 10-15% from the recent US DJIA, S&P 500 and Nasdaq's peaks. Again buy the dip will be a good strategy.
For the time being.
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Petar
Vladimirov Posledovich is not liable for any investment losses incurred
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Kind regards,
Petar Posledovich
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