Recent stock market volatility and declines could be a taste of things to come. The market has been moving higher for a decade now on the back of ultra-low rates and easy money. That era is coming to an end, however, and stocks could be in for quite the shock as monetary policy tightens.
The ultra-low rate policies of central banks have allowed corporations to invest, expand and hire. As the cost of capital increases, however, these wheels are likely to grind to a halt. As corporations are no longer expanding, profits could potentially begin to see sharp declines. As profits decline, it stands to reason that so will stock prices.
Many unwitting investors do not seem to be taking this into consideration and those insisting that the bull market is far from over could be in for a rude awakening. The declines of 2008/2009 are a great example of what can happen when investors are not well-diversified and do not consider the potential downside of equity markets. Stocks saw significant declines during that period that for some investors has taken many years to gain back. The selling seen during that period is also a powerful lesson on market behavior, and how fear can take over and cause massive-perhaps even overdone-declines in market value.
The financial crisis seems like a long time ago now to many, and some of the key lessons it can provide have been forgotten. Fear and greed can be extremely powerful emotions, and investors can lose out significantly if they allow either of these emotions to take over their objectivity.
Given the current economic and geopolitical backdrop, now is the time to take an objective look at markets and your portfolio. The stock market is providing some significant bearish signals currently and investors need to take notice. Consider it a warning signal before the bottom falls out again. The inability to hold rallies, weaker data out of China, and full employment all point to a potential slowdown. Once the next recession takes hold, stocks could see a swift and severe move lower that could see declines of 30, 40, even 50% or more.
The time to insulate your portfolio from such a significant drop is now. When it comes to providing additional portfolio diversification along with significant upside potential, there is arguably no better asset class to hold than gold. This key asset class may not only rise in value and add diversity, it may also provide an important hedge against a weaker dollar and accelerating inflation. Central banks all over the world have significant holdings in this asset class-shouldn’t you?
Adding gold to your portfolio has never been easier than it is today. 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 easy it is to incorporate this key asset class using your IRA account.
Don’t wait for the next major stock market decline or for the next recession to take hold before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.Tags: advantage gold, gold, market collapse, overvaluation, recession, stock market volatility