首页 News 正文

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

suisuiblue
1259 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

  •   苹果知名分析师郭明錤周四(10月31日)在社交媒体上发文表示,苹果明年可能会减少对芯片制造商博通Wi-Fi芯片的依赖,并推出自己的处理器。   郭明錤在社交媒体平台X上写道,“在2025年下半年的新产品(例如iPh ...
    uturn
    昨天 14:42
    支持
    反对
    回复
    收藏
  •   10月30日,小鹏汽车生态企业小鹏汇天宣布,旗下分体式飞行汽车“陆地航母”即将亮相2024中国航展,11月12日将在中国航展第二展区(斗门莲洲)进行全球首次公开飞行,同时“陆地航母”也将在珠海国际航展中心8号 ...
    yxtianyouyou
    前天 11:43
    支持
    反对
    回复
    收藏
  •   交易所监管文件显示,当地时间11月1日,亚马逊创始人杰夫·贝索斯拟出售约1635万股亚马逊股票,预计套现约30.5亿美元。今年7月,贝索斯已申请额外出售约2500万股亚马逊股票,按当时股价计算可套现约50亿美元。 ...
    blueskybb
    9 小时前
    支持
    反对
    回复
    收藏
  •   近日,凯撒海湾目的地(山东)运营管理有限责任公司(简称“凯撒海湾”)与携程旅悦集团签署战略合作协议,双方将围绕“海上目的地运营”、“旅游产品与服务创新”、“研学旅行”、“日韩及海外旅游市场开拓”等 ...
    llyyy2008
    7 小时前
    支持
    反对
    回复
    收藏
suisuiblue 新手上路
  • 粉丝

    0

  • 关注

    0

  • 主题

    2