The stock market has put together a decent run over the past week as investor appetite for risk has seen an uptick. Some optimistic commentary about the ongoing U.S./China trade war is the primary catalyst for equity gains this week, and investors are hoping that some significant progress may be made at the negotiating table in the weeks ahead.
The stock market has a tendency to turn on a dime, however, and any negative developments concerning the trade war could send stocks sharply lower again while fueling a rapid and significant rise in volatility. A technical breakdown could send stock investors running for the exit signs in droves, and a major decline of 20 percent or more could be seen quickly.
Regardless of what stocks do over the next several months, perhaps the more important question for investors to be asking right now is just how much potential upside the market may have left in the tank. Stocks have been in a bull market for a decade now and have been able to carve out a series of fresh all-time highs. These gains could be largely attributed to ultra-low interest rates and loose monetary policies, however. Stocks have also benefited from the ongoing economic expansion as well, but that expansion is getting very long in the tooth.
Recent economic data not only suggests that the trade war is having a measurable effect on economic output, but also that the economy is showing some weakness in key areas that may simply be cyclical in nature.
With the potential for the next major recession on the rise and little, if anything, that the Fed will be able to do to fight it, now may be the time to consider how much upside, if any, that stocks have left. As was seen after the last major recession a decade ago, stocks could potentially see declines of 30, 40, even 50 percent or more. From and objective viewpoint, the potential downside risks for stocks from current levels may be far greater than any potential upside. That makes now the ideal time to add diversification with asset classes that may outperform during the next major recession.
Given its unlimited upside price potential and its ability to act as a hedge against inflation, a weaker dollar and other economic and geopolitical risks, there may be no better asset class to look to than gold. Adding this asset has never been easier, and perhaps never more important.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and to learn more about the key role it may play in a portfolio. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation in gold using an IRA account.
Don’t wait for the next major stock market crash or for gold prices to take off without you. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: appetite for risk, bull market, china, economic expansion, low interest rates, measurable effect, trade war, volatility rise, waining