Is the new financial crisis coming and why it can be good for you?
So many talks about the coming financial crisis. I have to put my two cents. I would give a 50% chance crisis can begin in 2 years. Don’t wait for it now and relax a bit. You have enough time to get prepared. Well, US elections can bring it a bit faster. The democratic party is very old, experienced and smart. If their candidate has more chances to win, they will do all possible to bring the crisis before elections and blame Trump on it. You have to understand its not a question if crisis will happen or not, the question is when it will happen. Crisis is inevitable.
Many people are afraid of it. But I have another opinion. The crisis is a life-changing opportunity. I know it doesn’t sound good as it causes a lot of problems in the economy, employment, etc. But let’s be honest – we are traders and we came into this business to get as much money as we can. If you own some business now or have some investments, you should ask yourself what it will give you if crisis happens. Nothing or you can even lose all your money? Maybe it makes more sense to sell it and get ready to use coming opportunities?
I believe the nature of this crisis will be much different than in 2008. The main problem is government debt now. Pay special attention to decreasing interest rates. Do you know what it means? – Right, end of the long-term debt cycle. Besides, there is a huge gap in wealth. Central banks were printing money like crazy to buy financial assets and boost the economy. As a result, those who owned assets (like stocks) became much richer and very fast. Actually, it is also one of the signs of long-term debt cycle end.
So, what to expect next? Gold will rally. Oh, it doesn’t mean you have to buy it now. We are talking about a coming few years perspective. Short-term outlook as different. But let’s move on with our long-term forecast. I believe the stock market will start a multi-year decline (nothing like a flash-crash, but a slow drifting down). Here is the thing – I think the recovery will be painful and can take five years or so. Big changes will happen in the bond market. Newest bonds will offer much better returns, as interest rates at that time will be higher than now. I am already changing my strategy in accordance with new market conditions.
Wishing you a great week!