首页 News 正文

Legendary investors sound the alarm: US stocks may plummet by 30%, with a high possibility of economic recession

suisuiblue
1268 0 0

A legendary investor and economic consulting firm that accurately predicted the 2008 financial crisis Gary Shilling& Co President Gary Shilling recently warned that US stocks may plummet by 30% and an economic recession may arrive within a few months.
He said in a program that "stocks are very, very expensive now" compared with competitive assets such as US treasury bond bonds.
"If one day we wake up and find a large company in trouble, causing a sharp drop in the stock market, I wouldn't be surprised at all," he added.
This experienced economist has been known for accurately predicting several major market trends over the past 50 years. Before founding his own consulting firm in 1978, Shilling served as the first Chief Economist of Merrill Lynch.
He pointed out that the Schiller P/E ratio of the S&P 500 index is about 45% higher than the long-term average, indicating that the stock market has been overvalued in history.
The Schiller P/E ratio, also known as the Cycle Adjusted P/E ratio (CAPE), is calculated using the 10-year average profit after excluding inflation, while the regular P/E ratio is calculated based on the past year's profit, thus smoothing out the impact of economic cycles on valuation. Previous data shows that when the CAPE of the US stock market exceeds 25 times, it enters a crazy period of irrational prosperity.
In May 2007, the CAPE of the US stock market was 27.6 times, which later became the peak of this cycle, leading to the outbreak of the global financial crisis. The CAPE in January of this year once reached 31, only lower than the peak of the 1929 stock market crash (33) and the value before the 50% stock market crash in 2000 (44).
At the same time, Shilling, like many Wall Street giants, reminds investors that a few stocks constitute a significant portion of the current value of the stock market. He believes that this concentration is "dangerous" because it indicates that investors "really don't like other parts of the stock market, and therefore don't like most of the economy."
"This is a highly speculative market, and excessive speculative behavior seems destined for a significant decline," he said.
Shilling warns that the S&P 500 index may fall by 20% to 30%, with a "potentially even greater" decline. He predicts that the benchmark index may fall below 3500 points, a 32% drop from the current level of around 5100 points.
Decline is imminent
Shilling also listed a series of dangerous signals suggesting an impending economic recession.
He pointed out that the Leading Economic Index continues to decline, housing starts are under pressure, consumer demand and confidence are weakening, small businesses are reducing recruitment plans, the labor market is weakening, and the Federal Reserve is hesitant to cut interest rates.
Looking back at the past seven recessions, Shilling emphasized that they occurred on average 26 months after the Federal Reserve began raising interest rates. He said that it has been about two years since the first interest rate hike in this cycle, indicating that the US economy is about to enter a downturn.
"The likelihood of an economic recession is high," he added, pointing out that there has only been one successful soft landing since World War II.
Finally, he predicts that as mortgage interest rates decline, real estate activity will "significantly recover" in the next three to four years. He also pointed out the risk of a future "debt bomb", as the spiraling federal debt requires the government to spend more and more of its budget to pay interest.
CandyLake.com 系信息发布平台,仅提供信息存储空间服务。
声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
您需要登录后才可以回帖 登录 | 立即注册

本版积分规则

  •   知名做空机构香橼研究(Citron Research)周四(11月21日)在社交媒体平台X上发布消息称,该公司已决定做空“比特币大户”微策略(Microstrategy)这家公司,并认为该公司已经将自己变身成为一家比特币投资基金 ...
    caffycat
    昨天 11:18
    支持
    反对
    回复
    收藏
  •   每经AI快讯,11月20日,文远知行宣布旗下自动驾驶环卫车S6与无人扫路机S1分别在新加坡滨海湾海岸大道与滨海艺术中心正式投入运营。据介绍,这是新加坡首个商业化运营的自动驾驶环卫项目。 ...
    star8699
    3 天前
    支持
    反对
    回复
    收藏
  •   上证报中国证券网讯(记者王子霖)11月20日,斗鱼发布2024年第三季度未经审计的财务报告。本季度斗鱼依托丰富的游戏内容生态,充分发挥主播资源和新业务潜力,持续为用户提供高质量的直播内容及游戏服务,进一步 ...
    goodfriendboy
    3 天前
    支持
    反对
    回复
    收藏
  •   人民网北京11月22日电 (记者栗翘楚、任妍)2024广州车展,在新能源汽车占据“半壁江山”的同时,正加速向智能网联新能源汽车全面过渡,随着“端到端”成为新宠,智能驾驶解决方案成为本届广州车展各大车企竞 ...
    3233340
    昨天 17:06
    支持
    反对
    回复
    收藏
suisuiblue 新手上路
  • 粉丝

    0

  • 关注

    0

  • 主题

    2