Market analyst John Hussman, who is a market bear, has claimed that the stock market will lose about $20 trillion in the next crash. That is equal to 60% of the market value.
Hussman has been warning that stock valuations have been extreme for years, and is long overdue for a return to historical norms, according to Investopedia. “The only time we’ve ever seen a confluence of risk factors anywhere close to those of today was the week of March 24, 2000, which marked the peak of the technology bubble,” he wrote in a recent blog post quoted by Business Insider.
While Hussman’s prediction is certainly severe, a drop of that magnitude is far from unprecedented. In fact, it is not much worse than the last bear market that ran from 2007 to 2009, also known as the Great Recession. Additionally, some other market indices fared even worse than the S&P 500 in these episodes. Most notably, the tech-heavy Nasdaq Composite Index (IXIC) lost a whopping 78% of its value during the notorious “dotcom crash.”
The market value of all publicly traded U.S. stocks reached $30 trillion in January, per Barron‘s. Since then, the Russell 3000 has fallen by 1.5%, suggesting that its market value is just slightly lower today. As a result, the $20 trillion plunge predicted by Hussman would represent roughly a 66% decline. Other prominent investors and market watchers have issued bearish forecasts in 2018. –Investopedia
Hussman is blaming the Federal Reserve’s quantitative easing program for this major problem. “The current back-slapping about the success of extraordinary monetary policy is a lot like declaring victory in a football game at halftime, just before a flock of fire-breathing dragons swoops onto the field and eats the leading team. We have to allow for the possibility that the second half of the game will be violently unrecognizable,” Hussman said. “The Fed created yet another yield-seeking bubble that has encouraged vastly expanded indebtedness in every sector of the economy.”
According to yet another Business Insider article, billionaire hedge fund manager Stanley Druckenmiller sees a massive debt crisis brewing around the around the world and feels that could play a role in a massive global economic downturn. Like Hussman, he believes that easy money policies pursued by the Fed and other central banks around the world during the past decade have spurred excessive risk-taking and unsustainable levels of indebtedness. Because of this, a much bigger financial crisis than that of the 2008 recession is likely to follow, in his opinion.
In a country that is woefully ignorant of the tremendous influence exerted by the FEDERAL RESERVE, the WORLD RESERVE CURRENCY status, the insane quantities of DEBT held by governments around the world, and the MAIN STREAM MEDIA’s efforts to hide these realities, it is no wonder that folks don’t hold the politicians to account. Sorry for the run-on sentence. Herbert Hoover was blamed by many for the Great Depression and guess who will be blamed for the next crash?
The real culprits for the Great Depression were President Wilson, the gang that met at Jeckyl Island, and Progressives in general. The coming depression should be blamed on incredible quantities of DEBT, the use of DERIVATIVES, the undermining of the U.S. DOLLAR as the world reserve currency, ignorant world trade practices, and treasonous politicians over the last 100 years.
I’ve been hearing about the “coming depression” for over 50 years and have grown old without seeing it happen.
So when should we expect it? Sometime during my remaining few years of lifespan or sometime during my yet to be great grandchildren’s lifespan?
Anonymous, you pose a great question. I don’t think anybody can accurately predict WHEN a crash will happen. My statement is directed toward stupid politicians that spend like fools. Unfunded entitlements like my social security, govt. pensions, Medicare and the rest are promises made by irresponsible people that failed to fund pie-in-the-sky ideas. They figured some poor bastard in the future will have to deal with the underfunding. As one of the poor bastards that will have to deal with it at some point, I condemn the jerks that set up these Ponzi schemes in the pursuit of more votes.
None of us could run a household on ignorant spending for all time. I contend you cannot run a country on that premise either.
THIS WILL BE YOUR DESCENDANTS’ FATE
Uh-oh, there he goes again. The one who uses all caps most of the time. I won’t mention his name.
Eat me, I’m a cookie!
Chicken Little AGAIN? HO HUM, back to sleep.
Hey Hussman, the stock market was back up today. Tomorrow morning it might look bad but then close up. Do you get the drift??????
They will never let it happen…..
In a crash, the money lost simply goes into the pockets of those smart enough to sell now…It comes from the loss of the stocks held by everyone who waits.
” This suckah is going down “
Yeah the economy is sooo stable.2, 3 and 400 point swing just on a gedture frlm a govt official.
Once upln a time c ompaniex worth wss gauged by sales , production, a nd new improved items. Now it is just hearsay,
A 400 point swing in a 25-26,000 point market isn’t very much of a change percentage wise.
I situational traders are the only ones making it in the market
Instituational traders are the only ones making it in the market
Sometime in the next 40 years the stock market will lose 50% in a crash. Says stock guru overthecliff.