The last several months have seen increasing discussions over the potential timing of the next recession. Many analysts have already been sounding the alarm bells, and some believe that the next recession could be far more extensive and challenging than the last.
With the S&P 500 in striking range of achieving the longest bull market ever, there are reasons to be concerned that the market could be at or very near a long-term top. Here are a few issues to consider that could point to a major top and an upcoming recession:
Valuations: Low valuations in the aftermath of the 2008/2009 financial crisis lured stock investors back into the market. Many of the most popular stocks have, however, seen valuations climb to what are arguably unsustainable levels.
Corporate Profits: Corporate profits have seen a sharp climb in recent years as the economy got back on track and consumers began spending again. Just how much companies may have left in the tank is the subject of much debate. Rising inflation, tariffs and a potential trade war could all take a big bite out of corporate profits, driving stock process lower in the process.
Economic Recovery: The economy is on much stronger footing than it was a few years ago. This process has taken time, and has benefitted from ultra-low interest rates and loose monetary policies. The current expansion is getting very long in the tooth, however, and the cycle may have already largely run its course.
Lack of Choice: Following the last recession, investors had little choice but to pour money into stocks. The equity markets have been the only real game in town, as interest rates have been at or not far from zero for some time. Rising rates may give investors an alternative to riskier stocks, and investors seemingly have a lot more choice when it comes to where to put capital to work.
Full Employment: With the current unemployment rate sitting below the 4% level, the economy has effectively reached full employment. Readings below the 4% threshold may be a bearish signal, as further improvement would be very difficult, if not impossible, to achieve.
Calling market tops or bottoms is a tough business, and many go broke trying to do so. The above referenced issues should be used as more of a comprehensive guide, and any way you slice it they do potentially point to contraction and lower stocks ahead. Such an economic and equity market top could be seen next week, next month, or even next year. It is really just a matter of time.
The above issues and the warning signals they provide make right now an ideal time to consider added diversity in alternative asset classes. If you are looking for what may be the greatest value available, you may want to strongly consider adding physical gold to your portfolio.
Gold may potentially provide a significant hedge against many of the current economic and geopolitical issues markets are facing, and it also comes with significant upside price potential. Adding this key asset class to your portfolio has never been easier, and it can add much-needed diversification for what could be tough economic times ahead.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how simple it is to build an allocation in gold using your IRA account.
Don’t wait for the next major stock market crash or for the next major recession to take hold before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, corporate profit, full employment, gold, recession, rising interest rates, valuations