Headwind #3: The Case For The Coming Market Crash
From the Desk of Don Yocham: |
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For months now I’ve been laying out my case for dramatically lower stock prices.
Fed money printing is no longer fueling consumption. Price-to-Earnings multiples have yet to adjust to the lower earnings levels that will result. Rising interest rates resulting from tighter monetary conditions make the present value of those lower future earnings worth even less.
And the uncertainty surrounding future interest, inflation, and growth makes everyone step back from the table until valuations drop low enough to compensate for a much wider range of outcomes.
It’s a triple-whammy-plus set of factors driving stocks lower, each compounding the next. And this self-reinforcing cycle doesn’t end until confidence in the future price of money returns.
How far stock markets could fall is anyone’s guess — though I’ve laid three approaches to determining realistic bottoms.
Today I have a fourth.
But before I share the fourth with you, let’s review how far prices could drop and the three other ways to justify how we get there…
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P.S. In my FREE Prosperity Pub Telegram channel, I look at the market’s possibilities every single day with a group of like-minded traders.
Join us and see how we’re making these markets work for us.
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For months now I’ve been laying out my case for dramatically lower stock prices.
Fed money printing is no longer fueling consumption. Price-to-Earnings multiples have yet to adjust to the lower earnings levels that will result. Rising interest rates resulting from tighter monetary conditions make the present value of those lower future earnings worth even less.
And the uncertainty surrounding future interest, inflation, and growth makes everyone step back from the table until valuations drop low enough to compensate for a much wider range of outcomes.
It’s a triple-whammy-plus set of factors driving stocks lower, each compounding the next. And this self-reinforcing cycle doesn’t end until confidence in the future price of money returns.
How far stock markets could fall is anyone’s guess — though I’ve laid three approaches to determining realistic bottoms.
Today I have a fourth.
But before I share the fourth with you, let’s review how far prices could drop and the three other ways to justify how we get there…
P.S. In my FREE Prosperity Pub Telegram channel, I look at the market’s possibilities every single day with a group of like-minded traders. Join us and see how we’re making these markets work for us. |
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