Goldman Sachs: Risk Indicator is Flashing Red

stock market ups and downs

Today’s bull market in U.S. stocks is truly the ninth wonder of the world.

Remember where you were in March 2009? That was the beginning of a historic run for stocks that has outlasted any bull market ever seen before.

That’s correct… today we are riding the longest wave in America’s market history.

A good thing, yes! But too much of a good thing also means that generations of inexperienced investors are way overexposed to overheated markets.

According to Goldman Sachs, investors have forgotten what a true bear market can do to their financial security overnight. In fact, many millennials have never before seen a big market drop in their adult lives.

Analysts generally define a bear market as a 20% market decline – and that clearly hasn’t occurred in about 10 years.

This market is flying off the charts: and this time it is on the Goldman Sachs Bull/Bear Market Risk Indicator. The measure analyzes five critical market factors that indicate a bear is on its way.

Today, Goldman’s Risk Indicator says chances are more than 75% likely that we’ll be in the bear’s lair soon. The risk hasn’t been this high since the early 1970s.

Peter Oppenheimer, Goldman’s chief global equities strategist, says there isn’t reason to panic unless you are unprepared for what happens next.

In his team’s view, over-loose monetary policy from the Fed combined with America’s recent injections of fiscal stimulus have pushed stocks way beyond where a typical bull market would take us. This could turn on a dime at any time, Oppenheimer believes.

Goldman isn’t the only investment bank that has been ringing the recession bell this year. Professional investors have been quietly reminding us that the markets have a predictable long term pattern… and that means an inevitable swing down soon.


Barry Bannister, head of institutional strategy for investment bank Stifel, says a bear market is coming in no more than six to twelve months.

The risk comes from the Federal Reserve, his research team says. U.S. central bankers are playing with fire as they try to contain inflation while keeping growth and employment on the right track.

“We see stocks falling faster than the Fed can react,” says Bannister, who predicts that eventually the Fed will make a mistake that could spark an “unusually fast” bear market.

“Stocks are in the danger zone” of equity risk, he says, meaning investors are now way too optimistic. When it reaches the extreme risk levels we see now, “a short, sharp bear market often occurs.”

This is the same investment bank that, according to its own estimates, has been the #1 equity underwriter for middle market companies (under $500 million market caps) since 2005. The kind of place it pays to pay attention to, since their finger is on the pulse of America’s business backbone.

Here’s how Bannister sums up his view:

“We recommended investors position themselves defensively going into autumn…”

That raises the question for you: where is your portfolio positioned? Are you over-extended, or are you well-diversified with safe haven assets like physical gold and silver?


“We see gold as favorable for long-term investors,” Wells Fargo Investment Strategy analyst Austin Pickle said.

“Our twelve-month gold target range remains $1,250 to $1,350 per ounce,” says the analyst.

Wells Fargo believes that the recent U.S. dollar rally, which has kept gold prices under pressure, will run out of steam before 2018 dawns.

“Recent dollar strength likely will fade into year-end. This, in turn, should support gold prices—as gold tends to trade inversely to the dollar,” Pickle wrote.

“Coupled with gold’s recent decline, gold look fairly cheap by comparison. In our opinion, for long-term investors, accumulating gold today looks like a decent deal,” Wells Fargo concluded.


Goldman Sachs and Stifel are joining other professional investors like Morgan Stanley in issuing warnings to investors in recent months.

Morgan has been predicting a sharp decline for stocks, saying it could well be like a “rolling bear market” crushing one sector after another. Tech and consumer-discretionary groups, which have keep the indexes moving up in 2018, could be especially targeted by the bear’s claws.

When the bear strikes, will your portfolio – and your family’s whole future – be sitting helpless right in its path?

The historic bull market has hopefully enriched you over the last 10 years. Now it is time to consider how to protect what you’ve earned before it is too late.

Some choose to add physical gold and silver to their home safe or a nearby safe deposit box. Others prefer a Gold IRA, which allows them to hold safe-haven assets right alongside other traditional investments in a single tax-deferred account.

Which will you choose? We would be happy to answer your questions and help make a decision.

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