The last several weeks have seen a very noticeable difference in risk appetite and market dynamics. Stocks have begun to show some significant signs of cracking as volatility has broken out to the upside.
For stock investors, the last several weeks could simply be a small taste of more to come. Indeed, the market has covered a lot of ground over the last decade and could have a long way to fall if fundamentals continue to deteriorate. The next major potential catalyst for another leg lower could be the Fed meeting next month. Rising rates have already been blamed by many for the recent selling in equities, and further rate hikes could do significant damage to stock prices and investor confidence.
The Fed has been doing its best to maintain its independence, although it is hard to imagine that the central bank is not feeling the pressure at this point. Although markets are expecting another hike in a few short weeks, the real damage may be done if the Fed signals it plans to stay on course with several more rate hikes in 2019. For all of those who questioned the legitimacy of the stock market rally in recent years, the threat of further rate hikes and the possibility of a massive sell-off are very telling. In other words, the economy may not be able to tolerate higher rates yet, and stock valuations could see a dramatic shift without cheap money.
The major breakdown in the oil market is not going to help. Oil is down several percent today in light trade, however, the market is now testing the $50 per barrel level and could see another fresh leg lower. The significant declines in oil may also weigh heavily on stocks, as the energy sector is highly weighted. Not only that, but lower oil may be a symptom of a far larger problem: the potential for further slowing in China.
Any way you slice it, the markets have numerous, significant headwinds to contend with in the weeks and months ahead, and there exists the potential for a massive wipeout in stocks that could see the market decline by 30, 40, even 50% or more in the quarters and years ahead.
Such a sharp decline in stocks does not necessarily mean your portfolio has to go down with it, however, and investors have the opportunity right now to try to get ahead of the curve. One of the best ways to do so may be to scale back from equities while adding further portfolio diversification. Given the current environment of accelerating inflation, geopolitical risks and a rising risk of inflation, what better asset class to add right now than physical gold?
Adding this key asset class to your portfolio has never been easier. Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and how this asset class may play an important role in your portfolio going forward. Our associates are here to answer any questions you may have and can even show you how easy it is to build a significant allocation using your IRA account.
Don’t wait for stocks to see further declines or for gold prices to take off before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, catalyst, china, Fed, gold, oil, rate hikes, stock market collapse