A year ago, macro strategist David Hunter predicted a massive melt-up in financial assets, to be followed by an equally tremendous market crash.
Well, he’s certainly been right so far on the melt-up prediction.
All major stock indices are trading at record highs. And valuations have never been more stretched.
Market Cap to GDP (the famed “Buffet Indicator”) has never been higher.
Nor has the market’s price-to-sales ratio.
And it has never cost the ‘average’ American more hours worked to “buy” the stock market… (1220 hours to buy The Dow, against an average of 225 hours from 1964 to 1994)…
As analyst Sven Henrich puts it “everything has gone vertical“.
So, having correctly called the current melt-up, will Hunter’s prediction of a 65-80% crash in prices this year also come true?
Time will tell. But as extreme as that kind of drop may seem, history is on David’s side.
Whenever excessive debt has enabled market multiples to distort to unsustainably excessive heights – which is what’s happening now on an unprecedented level – a painful correction to clear out the bad debt and malinvestment has always occurred.
But despite his dire forecast, Hunter is more sanguine about what will follow. He predicts that those who preserve their capital through the coming crash will have the opportunity to deploy it at very advantageous terms as the next recovery begins. And like previous guests Jim Rogers and Steen Jakobsen, he sees a very bright future ahead for commodities and the companies that source, refine and deliver them to market.
Which is why now, more than ever, is the time to partner with a financial advisor who understands the nature of the risks and opportunities in play, can craft an appropriate portfolio strategy for you given your needs, and apply sound risk management protection where appropriate. Anyone interested in scheduling a free consultation and portfolio review with Mike Preston and John Llodra and their team at New Harbor Financial can do so by clicking here.