Last week you saw another new analyst bring its official forecasts for the market to severe selloff or crisis pull back in the near to medium term future. While no one feels comfortable invoking the “B” word (bubble) these days, a growing bubble across most financial asset classes has resulted from 10 years of ultra-loose monetary stimulus policy from the G10 central banks. A growing number of market observers and money managers are sounding the warning alarm for anyone who is listening through the mesmerizing haze of heady market moves.
This asset bubble could pop much quicker than the majority of people think is the way that the Fund Manager Ralph Jainz of Centricus Asset Management Fund worded his warning this past Monday. It put him in line with a significant roster of financial movers and shakers who are already expressing serious doubts regarding the ongoing viability of the current market bull run’s strength and endurance. This is why you need a gold IRA. The long-running historical safeguard metal gold offers insurance and protection during market turbulence. Now you need to learn what gold goes in an IRA.
The Strange Bubble That No One Wants To Discuss
What may be the strangest phenomenon about this bubble is that it is one of the few that no one wants to discuss. It’s like everyone in the room knows the markets are all in a massive bubble, but no one wants to be the guilty party that says something about the “emperor wearing no clothes” first. Jainz told CNBC on the popular “Squawk Box Europe” program:
“Nobody wants to talk about this being a bubble. It’s the greatest asset inflation bubble we have seen in 20 years.”
That so many people are making so much money off of it is a good reason not to want to disparage the multi-asset class bubble-in-progress. Despite the fact that many market players are playing the devil’s advocate these days and claiming that markets should still have further to rise, more and more well-known names in the industry are calling for a spectacular correction. Investing legend and financial guru Mark Mobius, the founding partner of Mobius Capital Partners, is one huge name who recently forecast an imminent correction of as much as an eye-watering 30 plus percent. Mobius warned:
“There could be a substantial correction in the markets. I’m not predicting that [a 30 to 40 percent adjustment], I’m just saying we’ve got to be ready for that. The catalyst I believe will come from continuing increases in interest rates. The (Federal Reserve) is definitely moving in that direction. When the Fed moves, everybody else has got to move in that direction. Any event could also be a trigger. But most importantly we’ve seen this long bull market that needs a correction… And short-term corrections can be very dramatic.”
If that is not a serious and credible warning to sell stocks now, then what is?
Federal Reserve Performs Its Second Interest Rate Hike of the Year
In only the first six months of 2018, the Federal Reserve has now hiked up interest rates two times. They are not finished yet either. Fed speakers have indicated that they have in mind two more before the end of the year as they watch a strongly growing American economy. This chart shows the last decade of interest rate policy activity of the Fed:
The problem is that there are risks closely associated with this policy approach, as Chief Executive Jim McCaughan of Principal Global Investors recently cautioned:
“The way I interpret this is, one further rate increase is probably the right answer for the rest of the year. Two further is probably what they’ll do, but they run the risk then of getting to the ultimate level fairly quickly and causing some slowness in the economy, which will bring about an inverted yield curve much sooner than it needs to happen.”
Jim’s fund counts fully $311 billion of assets under management in its U.S.-based investment fund. Despite the early year sell-off in equities that amounted to over 10 percent in the U.S. stock markets, wildly overpriced tech stocks have recently notched their high marks for year 2018. Jainz explained how this has disadvantaged defensive stocks, the ones that you want to be holding when the house of cards comes crashing down.
“Dispersion levels have been rising, people have been selling the losers to buy the winners. Now the under-performers are exactly the sectors you will need to protect you when the next cyclical downturn actually comes along, which is probably the case in the next 12 to 18 months.”
There is a growing chorus of investors and analysts who feel confident that tech stocks are massively overpriced to the point that they do not have any more space for further growth. This has not stopped starstruck investors from pouring more money into the major mega-cap titans such as Amazon and Netflix, both of which are higher by 47 percent and 104 percent respectively so far this year.
Yet the defensive under-performing stocks such as the healthcare and telecom stocks are down 11 percent or up only 3.5 percent, respectively for the year. Jainz is warning that no one in the investing world has learned from past mistakes made two decades ago:
“You normally need a generation to come along, a new generation to make the same mistake that we all did 20 years ago. And I probably won’t see another one until I retire in 20 years’ time.”
Prescient London Fund Predicts a Full Blown Crash Ahead
Fasanara Capital is an asset management fund based in one of the two the leading world financial market centers of London. They recently called for a full-blown crash based on the growing frequency of rapid market corrections. They call these warning signs of the worldwide markets’ real fragility.
Fasanara has a long and storied track record for calling corrections and crashes before they happen. In early February, they accurately forecast the market pullback by two weeks advance warning with their statement that stocks had become far overdue for a correction.
More alarming still, Fasanara Capital states that the market is now the most highly overvalued one in history period. This is a greater overvalued market than in 2007, 2000, and even the dreaded 1929. The fund is not alone in this assessment either. Jainz concurs, with:
“Now, it’s that dispersion that’s at the moment probably the most interesting opportunity in the market — start putting money to work in the losers and start taking a preference in the winners, because there’s probably going to be a mean reversion in both sectors going either way over next 12 to 18 months.”
Gold Is the First, Last, Best, and Only True Line of Defense Against A Full Scale Market Meltdown
If ever there was a time to be aware of the dangerous growing bubble across most of the major financial asset classes, it is today. Now you know all of the prescient reasons for why to invest in gold. It is time to learn more about the best ways of how to invest in gold while you still can.
Once the barn is on fire and the proverbial horses have all bolted for the hills, it will be too late to preserve your retirement portfolio values using the time-tested yellow metal. It’s time to start researching your various Gold IRA storage options now before the panic unfolds and investors begin trampling each other in their haste to reach the so-called stock market exits.