Stock Market Crash: Is the Dow headed for a repeat of 2008
We could not help ourselves and put the word stock market crash in the title because every Tom, Dick and Harry is now chanting this tune. Take a look at some of the recent headlines:
Is the stock market headed for a repeat of 2008? On marketwatch.com
A stock-market crash of 50%+ would not be a surprise — or the worst-case scenario on Yahoo Finance
Stock Market Crash 2016: This Is The Worst Start To A Year For Stocks Ever on rightsidenews.com
And the list goes on and on.
The Naysayers are busy listing several factors that in their opinion does not bode well for the market
Ultra low oil prices: we are told that low oil prices are bad for the economy. Hold on, was it not too long ago they were telling us that high oil prices were bad for the economy, so which one is it. Many oil companies will go bankrupt, but the ones that are left will emerge strong and be ready for the next bullish phase. It is because oil prices are low that car sales jumped and set a record last year; 17.5 million vehicles were sold, and many consumers started purchasing gas guzzlers they were avoiding before due to high gas prices. Ultra low oil prices are the equivalent of central bankers injecting roughly $1 trillion dollars into the global financial system, as that is how much the global economy will save at these rates.
The China factor; China’s economy is slowing down, and so the fear is that this could have a significant impact on our economy.
A big deal is being made over China’s slowing economy; this growth is something every developed economy can only dream off. U.S. Corporations export roughly $500 billion year worth of Goods to China. We have an $18 trillion economy, so this is a drop in the bucket and nothing to panic over.
Uncertainty after the Fed’s raised rates. For crying out loud, the Fed only raised rates by a paltry 0.25%, and they can immediately turn around and reverse their position if they wanted. However, in our opinion, even another 2-3 rates will do nothing to derail this economy as rates are being raised from ultra-low levels.
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