Is a 40 Percent Correction in the Cards for Stocks?

Risks for stocks seem to be increasing by the day. That being said, it could still me time before stocks finally make a long-term top. After all, numerous analysts have been calling for a top for some time now, yet the market has remained stubbornly bullish.

Whether the top is finally reached tomorrow, next week, next month or sometime next year, the end of the bull market is likely on the horizon. While a “correction” is defined as a pullback of 10 percent or more, a deeper correction could very well enter bear market territory, defined as a decline of 20 percent or more.

Some analysts have once again been sounding the alarm bell. This past week, JP Morgan Co-President Daniel Pinto suggested that stocks could potentially see a drop of up to 40 percent over the next few years. According to cnbc.com, he was quoted in a Bloomberg TV interview as saying “The equity market has some way to go for the next year or two. But then, if there is a correction, it could be a deep correction. It could be between 20 and 40 percent depending on the valuations at the time. The most important thing for someone like us is just to be prepared.”

Scott Minerd, global chief investment officer at Guggenheim Partners, was recently quoted in an article by Marketwatch.com as saying “Eventually the Fed will acknowledge that three rate hikes will not be enough, but it is going to raise rates four times in 2018, and market speculation will increase that there may be a need for five or six rate hikes. That will be the straw that breaks the camel’s back.” Minerd then reportedly pointed to a similar situation in 1987, when stocks were at record highs and the Fed fell behind the curve.

Numerous other respected analysts are offering similar warnings. The question is: will you listen?

Now is the time to get prepared for what could be a monumental stock decline. A decline in value so severe that it will swiftly wipe out much of the gains seen in recent years. Once the selling starts, investors may look to exit equities in droves, and will be on the hunt for other places to put cash to work.

Gold could potentially see significant inflows if (or more like when), stocks really begin to falter. Investors that take steps to prepare for a stock sell-off may avoid the carnage. Those that don’t, well let’s just say you were warned.

Now is the ideal time to consider putting capital to work in alternative asset classes, and physical gold should be at the top of your list. Increasing inflation, a weakening dollar and the current geopolitical climate are just a few of the reasons to own gold right now. A massive stock market meltdown may simply be another fundamental catalyst for higher prices.

Don’t try to “call” a top in stocks. Consider allocations in alternative asset classes now, while the going is good. Simply pick up the phone and speak with an Advantage Gold account executive today. Our associates are here to answer any questions you may have, and can even show you how to use your IRA account to begin acquiring physical gold. Call 1-800-341-8584 today to get started.

Tags: , , , , , , ,