Share Market Prediction – Would the Stock Market Crash?

  • Saturday, February 16th, 2013

investment_intro

Quotabit 99. “Share/Life” (11.11.2014.)

“You could only maximise your profit if you bought a share when its price was at rock bottom and had sold it when the price skyrocketed. If you buy the share when the price has already skyrocketed, you are unlikely to benefit from it and would be more likely to make a great loss.”

 

Share Market Prediction –

Would the Stock Market Crash?

A Stock Market Crash would affect everybody not just the people investing or trading in the Stock Market. It affects the value of the mutual funds, life insurance funds, pension funds, interest rates etc.

Many people in the financial world have suggested that the Stock Market would crash in the near future. The question is why? The fundamental reasons behind such thinking include:

1. High global debt especially in the developed countries

2. High global Debt:GDP ratio especially in the developed countries

3. Close to 0% interest rates in the developed countries for more than 7 years that is likely to change

4. The stock markets being artificially inflated to peak through enormous QE

5. The scope of Fiscal consolidation remains limited due to the fear of the governments losing popularity and social unrest

6. Austerity measures would reduce the GDP further thereby increasing the Debt:GDP ratio

7. No significant actual improvement in the economy despite enormous QE

8. The GDP growth remained low for most of the last few years

9. Falling/static income, increasing debt and expenses, falling purchasing power*

10. It is a Catch 22 situation. One option is to take the path of Fiscal consolidation and accept few years of degrowth. The other option is to continue inflating the economy artificially through QE and increase the debt further with the wishful thinking that the GDP would someday grow faster than the growth in the debt thereby reducing the Debt:GDP ratio.     

* Check the actual value (purchasing power) of your assets against the price of gold (the “Gold Standard”) not in the nominal value of any currencies. The fact is that the value (purchasing power) of gold does not increase, the value of the paper currencies (and their purchasing power) decrease instead. For many years the actual income, purchasing power and value of assets have been decreasing due to devaluation of the paper currencies.

The situation in the world economy as described above is a recipe for disaster. It would be a miracle if the solar superstorm does not hit the economy.

The second question is when is it likely to happen?

The third question is what precautions could you take to protect your wealth? 

 

Share Market Prediction –

Would the Stock Market Crash?

When is a Stock Market Crash likely to happen?

What precautions could you take to protect your wealth?

 

Share market prediction is provided based on the circumstances and trends in the markets, economy, other factors etc. The prediction is a perceived probability of the likely direction of the markets in general.

Important Notes from themedideas.com

Share market prediction is provided based on the situation of the market, economy, other factors etc. The prediction is a perceived probability of the likely direction of the markets in general. It is not related to any specific market/index or share/equity/scrip. 

Anybody using this information as a guide to take decisions regarding betting / speculating / investing / finance / any other would do that at his/her own risk. No responsibility for loss or injury whatsoever occasioned to any person acting or refraining from action as a result of information contained herein can be accepted by the themedideas.com.

People should take independent advice before they take decisions to act. This is information only, not investment advice.

When is a Stock Market Crash likely to happen?

*The majority of the global stock markets have gained considerably and some of them have reached their peaks due to the easy money available.

*Fundamentally, it would not be easy for the markets to go further up by any substantial amount unless the economy improves rapidly. Given the economic scenario in the world that is very unlikely.

*The geo-political risks have been increasing as well. A significant geo-political event or a “Black Swan” might very easily shake the financial world.

*As the rise of the stock market has been directly linked to the availability of easy money to the financial system it would not be difficult to anticipate what would happen if the flow of money into the bottomless pit stops or reduces for some reason.

*The bond market in the developed world is a mine-field that might explode in a flash with the slightest hint towards losing confidence.

*Downturn in China and in the prices of oil and commodities have started.

*While the continued lack of economic growth and “recession” might be a trigger, the possibility of a war or geo-political event is highly likely.

*The world economy is in a precarious condition.

*There is no other option for the people living beyond their means but to optimise their life-styles to match their financial credibility. It would be a long haul and the writing on the wall is clear. Some people have been trying to deny that as accepting the facts would harm their interests.

* Considering the developments in the economy, geo-political situation and the trends in the stock and bond markets it appears that the Stock Market Crash might happen by 2015-2019 and there is a high possibility of an unprecedented economic collapse and geo-political events by 2019 that hves never been experienced in our life-time.

What precautions could you take to protect your wealth?

If you accept that the Stock Market would crash, you should take the necessary precautions to protect your wealth. What you could consider doing include:

* Re-balance your investment portfolio as per your requirements and plan

* Avoid taking undue risks on the stock market. People trading on the stock market might consider using this as an opportunity to short stocks.

* Avoid keeping too much money or investing in equity related mutual funds or insurance products

* Keep greater amount of money in fixed income instruments for longest duration (like fixed deposits, tax-free bonds etc)

* Invest in gold when the prices fall substantially. It would save you in case of a serious econimc crisis. Even if the price of gold does not incresase substantially, the value (purchasing power) of gold would remain similar and protect your wealth against the eroding effects of inflation. The general advice is to keep 10-15% of your asset in gold. But this would depend on your personal circumstances and the prevailing economic situation.

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Previous Predictions

Share market prediction for 11 – 15 February 2013 was correct

11 – 15 February 2013 – Volatility might improve. There is possibility of a positive bias for the time-being, especially for the financials. The mood might change on 15.02.2013.

http://themedideas.com/investment/best-financial-tips/market-prediction/share-market-prediction-no-4-for-11-15-february-2013/

Share market prediction for 4 – 8 February 2013 was correct

4 – 8 February 2013 – “Volatility likely to increase. An unexpected reversal of the transient euphoria with the possibility of correction, especially of the financials, could not be excluded.”

http://themedideas.com/investment/market-prediction/share-market-prediction-no-3/

Share market prediction for 7 February 2013 was correct

7 February 2013 – “Volatility and erratic price movements likely to continue. Further correction could not be excluded.

Japan stock market is being driven by the exchange value of Yen and behaving differently. Nikkei’s might fall. The Asian market would find it difficult to rise and further correction could not be excluded.”

Nikkei fell 0.93%. The Asian market was down as well.The volatility in the European and American markets was high and erratic price movements happened. FTSE 100 Index was down 1.06% and DJIA was down 0.30%.

http://themedideas.com/investment/market-prediction/share-market-prediction-for-7-february-2013/

Share market prediction for 6 Feb 2013 was correct

6 February 2013 – “Volatility likely to continue. The possibility of erratic price movements, especially in the financial and mining sectors could not be excluded. Today might have been a dead cat bounce. Whether the cat is dead or alive, tomorrow would reveal.

Japan stock market is being driven by the exchange value of Yen and behaving differently. Nikkei’s rise is possible. The Asian market in general might follow as well.”

Nikkei rose 3.77%. The Asian market was up as well.The volatility in the European and American markets was high and erratic price movements happened. 

http://themedideas.com/investment/market-prediction/share-market-prediction-for-6-february-2013/

Daily Share Market Prediction

http://themedideas.com/investment/best-financial-tips/market-prediction/best-financial-tips-daily-share-market-prediction/

Weekly Share Market Prediction

http://themedideas.com/investment/market-prediction/share-market-prediction-no-1/

http://themedideas.com/investment/market-prediction/share-market-prediction-no-2/

http://themedideas.com/investment/market-prediction/share-market-prediction-no-3/

http://themedideas.com/investment/best-financial-tips/market-prediction/share-market-prediction-no-4-for-11-15-february-2013/

Best Financial Tips

How to create Wealth and secure your Financial Future: a practical guide – themedideas Facts and Figures

http://themedideas.com/investment/best-financial-tips/articles-investment/how-to-create-wealth-and-secure-your-financial-future-a-practical-guide-themedideas-facts-and-figures-part-1/

http://themedideas.com/investment/best-financial-tips/articles-investment/how-to-create-wealth-and-secure-your-financial-future-a-practical-guide-themedideas-facts-and-figures-part-2/

..

© Dr Sudipta Paul, themedideas.com, 2013

Share Market Prediction – Would the Stock Market Crash?
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