The financial markets have reached new records high. Most of the media, commentators, analysts, and so on kept telling you this time it’s different, that the fundamentals are so good that there’s no reason for you to fear a stock market collapse anytime soon. The roaring 2010s go on for the markets, so does the show. Yet, as Cyceon wrote several times in recent months, there are some news that appeared to be deliberately underestimated by business news media and investors themselves, therefore creating and fueling a vicious trend that could end badly.
The slowdown of China’s economic growth, the long forgotten miracle of the BRICS economy particularly Brazil and Russia, the euro area’s uncertain flirt with deflation, the Greece’s hell of ineffective austerity and hard-to-understand public debt management, the global weakening of global demand for commodities, the impossible-to-assess consequences of a possible crash in Asia-widespread shadow finance all indicate that something’s not so good deep inside these fundamentals praised by the bullish – and currently winning – side of the markets.
Grosso modo, prominent and most effective figures of the finance world – those one calls “oracles” – warned you as well. Warren Buffett dislikes long-term US debt, saying he’d short 20- or 30-year bonds if he had an easy, non-risk way. According to Bill Gross who has just turned “the corner on (his) 70th year,” the 35-year-old bull market is dying, underlining “our difficulty in escaping an ongoing debt crisis” aggravated by only 2 percent economic growth in advanced economies and a negative yielding Euroland bond market.
Peter Schiff who rightly forecast the global financial crisis in 2007 warns that when industry demand decreases for six months in a row, it means the economy’s already in recession. This happened in 2001 and 2008. “The dollar is going to crash, buy gold,” Schiff advised. You’re right when you’re not listening to gurus and making your own decisions based on your own assessment. However when experienced investors like those three men highlight facts that you can quite easily verify by yourself, you may be able to survive the next financial crisis by listening to them, just a bit.