Can a New Lockdown Lead to a Stock Market Crash?

Dear Reader,

A new economic lockdown in the USA will almost certainly crash the major US stock market indices by more than 30%. The Nasdaq composite could fall more than 40 % even.

Why? Even as things stand US stocks, technology stocks especially, are overvalued. For US technology companies the investing public is rightly assuming that the coronavirus will speed up digital transformation and technology corporations will ultimately achieve higher profits and revenues. But much like during the dot-com boom and subsequent bust the market is assuming the profits and revenue increases will come sooner and in bigger sizes than possible.

That is why technology stocks in the US are grossly overvalued as of this moment. Yes, in 5 to 10 years the US technology companies could grow into their valuations, but a new lockdown could crash the DJIA, S&P 500 and the Nasdaq Composite by 30% or even more. 

And the coronavirus could force both Trump or Biden to lock down the economy, no matter the short-term economic consequences.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich