CNBC Writes: Scary! This bearish call points to 40% market drop

The stock market is trading at unsustainable levels that could eventually lead to a major sell-off, with a possible 40 percent drop in stock prices, hedge fund executive Mark Spitznagel told CNBC Wednesday.

“The simple answer, the mom and pop answer, I think, is just to step aside,” said Spitznagel, founder of Universa Investments and an associate of “Black Swan” pioneer Nassim Taleb.

Spitznagel, incidentally, has some Street cred when it comes to predicting downturns: He called it in 2000 and 2008 and made one of the biggest profits on Wall Street during the 2008 financial crisis, while many other investors were losing money.

Appearing on “Closing Bell,” Spitznagel suggested the Federal Reserve, which last month reaffirmed its policies on bond purchases and record-low interest rates, is basically propping up stocks and otherwise distorting the market.

“It’s a market that is sort of set up, I think, for a major crash, a major sell-off,” said Spitznagel. “I would argue all the major tops we’ve seen in the market over the last 100 years look very much like it does today.”

“The ultimate causes of crashes is the distorted environment we’re in,” he continued.

In turn, Spitznagel recommends retail investors step aside and wait for opportunities to come.

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I agree with his analysis 100%. The only thing I would add is my mathematical timing work. There will be a 40% decline but it will happen over the next 2-3 years and not in a crash type of an environment. It will be very similar to the 2000-2003 move. Further, my work indicates that this decline will really get going after March of 2014.

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World Report Writes: Ignore the Pundits Predicting a Market Crash

jesus and the stock market investwithalex

There are many reasons to be concerned about the market these days. Among them are the government shutdown, the recent run-up of the market and the fear that stocks are currently overvalued.

The problems of trying to time the market are many. Short-term movements are random and unpredictable. Prices change rapidly, making it difficult to predict them with any certainty. Missing a relatively few of the best trading days by “sitting on the sidelines” can have a seriously adverse impact on your returns.

I oftentimes use the terms “Collapse” of the US Economy and the stock market too loosely here. This little note is to correct that. I agree with the first premise of the article that you should ignore anyone who is predicting a market crash at this point in time.

My work doesn’t show that activity. It shows a prolonged 2-3 year decline into the 2016 bottom. Not a huge drop over a short period of time, but a lot of volatility, up and downs, with a general trend pointing down. Basically, we have to get into the 8,000-9,000 territory on the DOW over the next few years.

However, I do not agree with the premise that the market cannot be timed. It very well can be. My mathematical work clearly proves that. It is the authors close mindedness that leads him to that unfortunate conclusion. Yet, instead of arguing the point I will show you how the market can be timed over the next few months. Keep coming back.

P.S. After a short discussion with my office mate Jesus M. he has confirmed that there won’t be a crash either.

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