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Market Crash


By: Marvin Germo | May 14, 2018

Financial Advisor from Singapore Jess Uy predicts a market crash

Meet Jess Uy, a financial advisor from Singapore who is exposed into global funds investing. Here’s the rationale on why he believes that there could be a possible market crash in 5 years time.

If you want to meet Jess Uy and learn more on how he breakdowns investments, click this link.

Catch me in my live training events! (quick plug)

The heart of why I do this seminars is I want to build a generation of Filipinos with the right foundation in stock investing.  I want to bring smart investing to every Filipino around the world! If you would like to know more on how you could time the market checkout the trainings below.

Stock Smarts Qatar —  February 5 – 10, 2019
Make Money, Grow Money (Manila) – February 13, 2019
Stock Smarts Manila —  March 9, 10, 16, 17 & 23, 2019
Stock Smarts Cebu —  April 6 & 7, 2019
Investing Insights Japan – April 13, 2019
Stock Smarts Singapore —  May 11 & 12, 2019
Stock Smarts Iloilo – July 6 & 7, 2019
Stock Smarts Cagayan De Oro – July 20 & 21, 2019
Stock Smarts Hong Kong – August 11, 2019
Stock Smarts Taiwan – November 2, 2019

Jess Uy and his five reasons why the stock market may crash in five years

1. Economic / business cycle already on the uptrend.

Eventually it has to reset. That’s just how it works. We have already been on a very long bull run since the last financial crisis in 2008, normally there is a reset in 10 yr timeframes. We are already stretching out of that range.

2. Inflation is rising.

Although this is also an indication that economies are getting stronger, once it starts to runaway, it will create problems. For now it is still manageable.

3. Interest rates are rising.

This is a bit related to item 2 above. Central banks normally increase interest rates to battle inflation. If they fall behind and inflation starts running away, they may have to raise rates aggressively which can impact businesses and households. Slower increases are more manageable as businesses and households can plan but once they start increasing rates faster than planned, it will be problematic especially for those who need to service debt (eg. corporate debts or mortgages, etc)

4. Excessive Market exuberance.

As of the moment, we are not there yet but eventually we will get there. With strong economic and corporate results this will usually lead to complacency and retail investors get excited and start piling into the stock market sending it much higher.

5. Unrealistic and Stretched valuations.

Although valuations have hit highs, we are also not there yet (in terms of being very stretched) but eventually it will happen. This is also related to item 4 above as strong economies and corporate results usually lead to investor confidence sending the market higher.

Making Money

The fastest way to make money in the stock (equity) market is at the start of the bull run and at the end of the bull run. I think we are nearing the end for this time period. We may still end up with a multi year or multi decade bull runs but recessions and corrections will be part of it. So the next major pullback will eventually recover too but everyone should consider their objectives, risk appetite and timeframe when investing.

If someone needs money soon say for funding education or retirement, then they may choose to de-risk and allocate more for short term Low risk bond funds or even cash/cash equivalents. I’m not a big fan of bonds as the prices will plummet once interest rates rise but short term low risk bond funds are fine for liquidity needs. They are the least affected by interest rate hikes compared to longer term bonds. This doesn’t mean I advocate a full exit from the equity/stock markets but just a re-allocation. The level of re-allocation will depend on each individual’s needs. The issue is that some people take derisking to the extreme and miss out on the upside of the stock (equity) market for their longer term goals. For longer term investors, any “crash” is an opportunity to buy at really bargain prices. Since we cannot predict the future, we may not really be able to pinpoint the exact time of a market downturn but we have an approximate idea if stocks/equities are already cheap enough for longer term accumulation and longer term goals.

Hope this helps and happy investing!

I’m excited to share my 5th book overall and the 4th book in the Stock Smarts series, Stock Smarts: Breaking the Resistance – How to time your traders perfectly. The heart of this book is to teach you strategic ways on how to come in and buy and sell stocks in a way where you come as the market is headed up and come out as the market is headed down. The book is now out and exclusive via Marvin Germo Book Orders.
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