As we turn the page on 2021 and enter the new year, experts are weighing in and voicing their outlook on where they believe the markets are headed.
Spoiler alert– it’s not looking good.
To start, investors across most markets have recently been spooked by Fed Chair Jerome Powell’s latest admission of inflation indeed not being transitory and that it was time they retired the use of the word.
The markets reacted instantly and negatively, previewing what could possibly be a glimpse of what’s to come in the future.
Some experts believe that either we have just witnessed the top of the next stock market bubble or will see it soon over the next few months to come.
These experts also believe that we will see declines in the stock market by as large as 70%.
David Wright, the co-founder, and co-portfolio manager of Sierra Investment Management, recently stated in a Business Insider interview:
“We’re at a period of very high risk. Time to buckle your seatbelts.”
He went on to say that he believes the Dow is due for a 50% decline, and the Nasdaq may see one as high as 70%.
Fueling Wrights’ beliefs are a few indicators along with factors such as, quote, “Inflated market valuations have become amid unprecedented fiscal and monetary stimulus.”
Wright also pointed out that over 100 stocks on the NYSE recently posted new 52-week lows versus the 10 that posted new 52-week highs.
“What this means is that only a few large stocks are holding the indexes up, while an increasing number of stocks are already in bear markets,” he claimed.
“This divergence is often seen in connection with major market highs and was a key signal in the weeks before the crash of 1987.”
Because the markets have been overly bullish for some time now, this may segway perfectly into our following financial expert’s view on the market.
Berkshire Hathaway’s Charlie Munger recently stated in a conference that markets are wildly overvalued in places and that the current environment is “even crazier” than the 1990’s dot-com boom that eventually led to a bust.
Ted Oakley, founder and partner of Oxbow Advisor, believes a large correction is likely within the next 2 years:
“The highest risk is in the stock market.”
“We’re in a period that we call it ‘everything is speculative,’ and that’s true, almost everything is speculative. Private businesses are selling for speculative prices, but the markets are selling for prices that actually have never existed before.”
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