When it comes to financial opinions, having some “skin in the game” matters.
There’s a general air of cynicism surrounding so-called experts in financial media. Perhaps it has something to do with the way they tend to miss significant market movements, or the way they make bad market calls with stunning consistency. Or perhaps it’s the public’s redundant expectation that an overwhelming majority of these financial gurus will be bullishly biased, even when the pulse of economic reality screams bearish.
To be fair, there’s also a difference between the opinions of academics (economists), media personalities (who have no real financial stake in the markets), and actual “practitioners” who have “skin in the game”--professional investors whose actions and words may cost them their business or career.
Their opinions, though not always right, are the ones that may hold enough weight to be worth considering.
Prominent figures in the financial community are warning of an imminent collapse in the financial markets.
Last week we reported how the current stock market bubble is a consequence of the biggest debt-funded buy-back spree in market history, making the current bull market more of an illusion than reality. If you need a little more to chew on, take it from a number of prominent names in the financial world. They see something big coming, and it doesn’t look pretty.
- David Kostin - Chief Equity Strategist at Goldman Sachs states that "the forward P/E multiple of the S&P 500 has risen by 80% since 2011 (to 18x) and now trades at the 89th percentile compared with the past 40 years while the typical stock is at the 99th percentile of historical valuation."
Overall, Goldman Sachs analysts warned last week that stocks are exhibiting an "elevated valuation on almost every metric,” another way of saying that the current bull market is exceedingly overvalued.
- Philip Parker - Chief Investment Officer of Altair Asset Management, convinced of an imminent market collapse, made a rare gesture of returning his clients’ funds, effectively placing his firm’s business on hiatus.
“Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision, however preserving client’s assets is what all fund managers should put before their own interests,”
Sacrificing his firm’s business interests for the sake of their clients, this act alone not only deserves accolades for its sheer contrarian gutsiness, but also for its contrarian sense of “ethics,” privileging clients’ interests over their own (a very rare bird in the financial industry).
- Seth Klarman - Chief Executive of the Baupost Group: Klarman’s fund oversees $30 billion under management. A prominent figure on Wall St. with a significantly large following, his opinions are not taken lightly. The content of his message may echo an old Wall St. adage (having courage to buy when the majority are fearful and exercising fear when the majority of traders and investors are overly courageous), but the validity of the message rings clear now as it had countless times in the past.
“When share prices are low, as they were in the fall of 2008 into early 2009, actual risk is usually quite muted while perception of risk is very high...By contrast, when securities prices are high, as they are today, the perception of risk is muted, but the risks to investors are quite elevated.”
- Bill Blain - Strategist at Mint Partners actually picked a specific date--October 12--after which “horribly interesting” things will follow.
“There are just too many contradictory currents out there. The unsustainability of burgeoning consumer debt, unfeasibly tight credit spreads, the sandcastle foundations of student loans, autos, housing and the CLO market, China, Trump, politics.. worries about what follows Brazil in the EM market, and whatever… The risks of a massive consumer sentiment dump..”
“At the moment, my prediction is October 12th. Around that day it’s going to get horribly interesting..”
These warnings shouldn’t come as news to most Americans.
After all, this topic was a central issue during the 2016 presidential debates, after which Americans voted in Trump--a “businessman”--over a career politician.
Have we so soon forgotten this moment during last year’s presidential debates?
The fact that Americans voted a businessman into the highest office of the nation speaks volumes about their concerns.
The majority of Americans believe that he can fix the economy, which for some time now has been in shambles thanks to the Obama administration and the Fed. Trump warned of a “big fat ugly bubble,” and his message resonated with America as it reflected the way Americans experience economic reality in their day-to-day lives. So any announcement of this crash shouldn’t come as a surprise.
Don’t let this crash decimate your life savings.
Protect yourself by decreasing exposure to stocks and increasing your positions in sound assets. You can easily buy gold online to hedge your portfolio. Remember that not only will precious metals protect you from a stock market crash, they will also rise when all other paper assets fall.
There’s a sense of bleakness among financial professionals that the coming bubble burst may be bigger than anything we’ve seen in recent history. Would it not be wise to take the extra step of protecting your prosperity, particularly when precious metals constitute “real wealth” in contrast to risky “paper” assets?
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