Next Five Years Not about Winning… But Surviving
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
The messages from the ECB and the Fed couldn’t be clearer. They see major problems in the financial system and in the world economy, and they will do whatever it takes to save the system. But they will fail.
The autumn of 2019 will see a major shift in sentiment as markets turn from a secular bull to a secular bear. We are likely to see major crashes in many global stock markets. Virtually no one is prepared for this, so there will be both panic and despair.
Up for discussion: The US stock market is at a historical overvaluation; central banks are in panic mode; ECB gobbledygook is hiding the real problems; global debt is now out of hand; what comes after the flood; hyperinflation will lead to the implosion of the financial system; waning confidence and waning markets; US markets are ready to crash; will the Dow go down to 1,000 or only to 10,000; and it is not about winning, but survival.
Von Greyerz has no interest in making money on bets on financial instruments. Instead, his purpose in making these strong statements on the direction of investment markets is to shake up investors and make them aware of the enormous risks that the world is currently facing.
Now is not the time to think about making money on investments. It’s the time to think about losing as little as possible in the next five years. Even if you don’t own stocks or bonds, you will lose on the value of your house, or you will lose your pension, or your job, or your unemployment benefits. You are also likely to lose the money you have in the bank, either through pure debasement of the currency, or bail-ins, or bankruptcy of the bank.
What we must remember is that wealth preservation means trying to protect your assets from total destruction rather than making high returns.