Dear Reader,
US stock markets keep going higher since their March lows.
Personally, I think the upward stock market movement will continue until November/December 2020. Then we will experience again a large fall of the major stock market indices of above 10%, more likely more than 20% decline.
Why? Simply because than most likely during the late autumn and in the vicinity of winter the coronavirus second wave will be in full swing. Presidential candidate Joe Biden has already said he is prepared to shut down the economy again if the health experts recommend him to do so.
I do not know if Joe Biden will win the coming November 3 US Presidential elections, but the again spreading of the coronavirus could well force the hand of the next US President, whoever he may be, to institute an economic lockdown again.
A new US economic lockdown will, of course, cause many businesses to lose revenue and ultimately profits and the US stock market will naturally come down hard. Banks will be hurt a lot this time around, due to nonperforming loans.
In any effect, the US stock market is due for a correction and I forecast this to happen in November/December this year.
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
1 comment:
I am not quite sure about the stock market correction in US dollars and I will explain why. Ray Dalio mentioned that we should be thinking more about preserving the purchasing power.
Preserving purchasing power means holding precious metals or productive assets like stocks, bonds, farmland, real estate.
But bonds are claims on cash so it is not sure that those will preserve purchasing power.
Can stocks preserve purchasing power? They can still be considered businesses.
In order to answer this question we must evaluate the probability of the major currencies to preserve purchasing power.
The rise in the stocks and in gold in the last 20 years since 2000 was predominantly not because stocks were the place to be or gold was such a good investment, but because the major world currencies did lose against those two
inversely correlated asset classes and also because credit was cheap.
Therefore I agree that we are going to see the stock market lower in terms of gold,
but I am not sure that the stock market would go down in terms of US dollars, which may come as a surprise to a lot of investors.
Therefore Dow Jones, S&P and Nasdaq may go up in US dollar terms, but in gold terms I believe there will be a stock market crash meaning we will soon be seeing Dow to gold ratio lower than 5, meaning 6 or 7 tsd. US dollars per ounce of gold.
Food prices and food shortages are on the rise without GDP growing - these are the early signs of difficulty coming upon us.
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