‘Rich Dad Poor Dad’ Author Warns of Stock Market Crash, Economic Ruin

The market historian and GMO cofounder shared his thesis with economist David Rosenberg during a recent Rosenberg Research webcast. A second no-brainer buy during a stock market crash is robotic-assisted surgical system developer Intuitive Surgical (ISRG 0.90%). Since we don’t get to choose when we https://1investing.in/ get sick or what ailment(s) we develop, there’s steady demand for healthcare stocks offering drugs, devices, and operating systems. Every few weeks, and without any real evidence, Wall Street will try to convince you (and itself) that Powell is losing his nerve — that the bear market is ending.

To say the Federal Reserve wants a “crash” isn’t entirely accurate, however. The Fed has been trying to balance its rate hikes while steering the U.S. economy toward a “soft landing” — in other words, curb inflation without causing a deep recession. Last year, Fed Chairman Jerome Powell also said the U.S. housing market would likely need to go through a “difficult correction” before achieving “better balance” in prices and affordability. In a no-landing scenario, we’re chasing inflation, and it’s a greased pig. Our strong economy and robust consumer prevent supply and demand from fully realigning, increasing the risk of inflation flare-ups and keeping the consumer price index above that 2% target for a protracted period.

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Analysts there anticipate better than expected earnings growth, improving global markets, easing supply chain issues, and a return to pre-pandemic spending habits. “Inflation at current levels remains unacceptably high,” he wrote in a letter to investors last month. Legendary investor Jeremy Grantham warned investors of a potential stock market crash in his 2023 outlook letter that was published on Tuesday. Meanwhile, annualized inflation has slowed from a 40-year high of 9.1% to only 3% over the last 12 months — not far off the Federal Reserve’s 2% target. The decline has fueled hopes that the US central bank, which has hiked interest rates from almost zero to north of 5% in a bid to crush inflation, may soon reverse course. If the Fed does reduce borrowing costs, that promises to slash the odds of a recession and provide a boost to stocks and other assets.

• Instead, it’s about being alert, and reacting when conditions change.
• This isn’t inflation directly related to the war in Ukraine, either.
• That’s because selling instruments and accessories with each procedure, as well as servicing its robotic systems, generates juicier margins than actually selling the da Vinci surgical system.
• Hedge-fund personality Bill Ackman, the founder of Pershing Square Capital, is well-known among investors for his lucrative Covid-19 bet.

That means it’s not out of the woods yet and tighter policy is still coming. China is reopening from the economic standstill that was “zero COVID.” And the US economy is stunning everyone with its resilience. This is the Fed balance sheet and it clearly lays out its plan for everyone to see.

Stock Market Crash Prediction – What Could Happen to the Market in 2022

Berg said he anticipated that a brutal recession, and potentially a banking crisis, could tank the S&P 500 by more than 20% to below its October low — and could even pull it down by 45% or more to its pandemic low of below 2,500 points. The S&P 500 could crash nearly 50% as the US economy sinks into a severe recession, a veteran technical analyst has warned. “The generation that is trading right now has never gone through a sustained correction. It’s coming — I don’t know when, I don’t know what’ll trigger it, but they will learn their lesson,” he continued. “When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years,” the legendary investor and GMO cofounder said. Sean Williams has no position in any of the stocks mentioned.

In fact, he’s explicitly said he would rather hike rates too high and risk a recession than lower them too early and watch inflation stick. According to Sharma, land and home prices have annually fallen around 5%, while the funding vehicles used by local governments to purchase property now make up almost half of China’s government debt. Defaults have been common in the sector, with even its most stable developers at risk. Per data from Yahoo Finance, there are 11 years that fall under similar conditions, each of which recorded net gains between September and December. Perhaps expectedly, December is historically the strongest of the back-four months, recording an average 2.5% gain in comparable years and trending in the green 91% of the time. Yun sees two future scenarios playing out based on a variety of factors, Newsweek reported.

For anyone keeping score, inflation is currently pegged at 4.8% for 2021. And panic set in … People ran to banks to withdraw roa meaning money and liquidate investment accounts. People were also using margin to invest, thanks to their confidence in the market.

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They continue to predict a mild downturn in the first half of 2024. However, housing experts have consistently been saying a 2008-like crash is not imminent — that a nationwide housing shortage is what has kept home prices high, despite elevated interest rates. Though high rates have somewhat helped tip prices down in some areas, it’s low availability of homes that’s keeping demand high and therefore pressurizing prices. It’s worth noting that Kiyosaki is a vocal critic of the Biden administration, and has been warning of an epic market crash and promoting gold, silver, and bitcoin as haven assets for more than two years. The personal-finance guru has also freely admitted that he plans to capitalize if markets tumble and the economy crumbles, as “the best time to get rich is during a crash.”

One could be “some calming” in the economy that could lead to lower mortgage rates and more buyers entering the market. Still, affordability is still a stark issue, even in the West where prices have ticked down. [In bubbles] people don’t “get” how far you have to go down to the last major low, which is always the best target for a crash. The only way to have a soft landing is not to have a hard bubble. There’s no soft landing from a hard boom — a major bubble — ever, ever, ever, ever.

MSFT Forecast: Why This ‘Magnificent 7’ Stock May Be Muted Heading Into 2024

It’s VERY important to have a strong trading plan, especially when shorting. There’s great risk in short selling … If stocks go up, there’s no limit to your losses. The difference now is that it’s due to a supply and demand issue, not overexuberance in the market.

The unpredictability of the spread and virulence of new COVID-19 strains means a return to normal is still potentially a ways off. With every country seemingly having its own approach to tackling the pandemic, supply chain issues and workflow disruptions could remain commonplace throughout the year. Prospective buyers are balking at paying near-record prices and taking on mortgages when interest rates have more than doubled since the start of last year.

“If you want to have US equities because you have to, then for heaven’s sake, play the long game and do resources and climate change, and pretty well stay away from everything else,” he said. Jeremy Grantham has warned the implosion of an “everything bubble” could tank the S&P 500 by up to 50%, and plunge the US economy into a painful recession. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.

Kiyosaki’s latest tweet didn’t spell out why he expects stocks to plummet and a brutal, protracted economic downturn to set in. Yet he predicted back in May 2021 that the Fed would raise rates to tamp down inflation, and that would cause stocks, bonds, real estate, and gold to crash. He was correct on the rate hikes, but asset prices and economic growth have proven resilient to higher borrowing costs.

And that means Wall Street will eventually have to open its eyes, take its fingers out of its ears, and watch this bear-market rally fall apart. The same stock promoters who — at this time two years ago — were encouraging investors to jump into the market and buy anything are now preaching the religion of accounting metrics and due diligence at private investment conferences. And Wall Street’s most adept investors know that our economy’s journey to something like normalization doesn’t have to move in one consistent direction.

What truly makes Duke Energy an intriguing investment is the $58 billion to $60 billion the company is spending on new infrastructure projects between 2020 and 2024. The vast majority of this spending will be on renewable energy, which will lower the company’s electric generation costs and lift its growth rate. As the U.S. goes green to fight climate change, Duke’s transition to cleaner forms of energy will benefit its shareholders. The beauty of utility stocks is the transparency of their cash flow and outlooks. This is to say that demand for electricity doesn’t change much from one year to the next, which is what leads to predictable profits and market-topping dividend yields.

Watch: Why China’s Yuan, not the Euro, could become the dominant global currency

“The Fed’s record on these things is wonderful,” said Grantham, who previously predicted the financial crises in 2000 and 2008. “It’s almost guaranteed to be wrong. They have never called a recession, and particularly not the ones following the great bubbles.” “We want to be sure that we don’t make the mistake of not tightening enough or loosening policy too soon.”

Whether the economy will be able to handle more rate hikes without slowing into a recession is an open question that the stock market cannot answer. All stocks can do is fall in a spectacular fashion that has been not quarters, not years, but over a decade in the making. They don’t tell the whole story of what’s going on in the US economy, or even at US companies. FactSet projected that the S&P 500 would see a decline in year-over-year earnings this quarter. That’s bad for stocks, because companies need economic activity to make profits.