Sell Before Market Collapses
US stock market experts are warning investors to sell now. They see the S&P 500 index taking a significant hit in the coming months. The index has risen about 8% in 2023. It rose on investor hopes of the Federal Reserve easing their tight monetary policy. However, financial leaders predict that the rally won’t last long.1
Troy Gayeski is the chief market strategist at FS Investments. He forecasts the S&P 500 index to drop about 22% over the next six to twelve months. He advises investors to sell their stocks now to de-risk in advance of potentially very painful losses. “There’s no reason to wait. It’s not like you’re going to leave 10% upside on the table,” he said. Gayeski also stated that the strongest rallies have always been in bear markets.2
Similarly, Morgan Stanley’s Michael Wilson warns that the rally in the S&P 500 is at risk. Wilson was ranked No. 1 in last year’s Institutional Investor survey for correctly predicting the stock slump. He believes that the percentage of stocks outperforming the S&P 500 on a three-month rolling basis is the lowest on record. This is the market’s way of warning investors that the bear market is far from over. Wilson also thinks that the biggest risk could come from a slump in the technology sector if inflation proves sticky and bond yields rise.
Jeremy Grantham is the co-founder of investment firm GMO. He made his name predicting the dot-com crash in 2000 and the financial crisis in 2008. Grantham is sounding the alarm again. Grantham warns that another epic bubble in financial markets is bursting. He thinks the turmoil that swept through the banking sector last month is just the beginning. “Other things will break, and who knows what they will be. We’re by no means finished with the stress to the financial system,” he told CNN.3
Worst Case Scenario
Since early 2022, when the S&P 500 hit an all-time high, US stocks have dropped about 15% as central banks have jacked up borrowing costs. Grantham sees much steeper declines on the horizon. The “best we can hope for,” he said, is a fall of about 27% from current levels. While his worst-case scenario sees a plunge of more than 50%. The low point might not arrive until “deep into next year,” he added.4
Signs are pointing to increased market instability soon. Investors may want to consider selling their stocks now to avoid potentially very painful losses. While some analysts predict a smaller decline in the S&P 500, market experts like Gayeski, Wilson, and Grantham warn that the bear market is far from over. If you were to capitalize on this rally, you could preserve your gains by moving the money into safe haven assets. Precious metals are proven stores of value that can withstand bear market forces. To learn more about how a Gold IRA can protect your portfolio from market downturns, contact us today at 800-462-0071.