Commentary: Warning - Stocks will collapse by 50%

"There are specific sectors of the market that are all but guaranteed to perform well during the next few months. Getting out of stocks now could be costly."

By JOSEPH MORGENSTERN
December 15, 2014 21:58
4 minute read.
Tel Aviv stock exchange

Tel Aviv stock exchange. (photo credit: REUTERS)

 
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It is only a matter of time before the stock market plunges by 50 percent or more, according to a number of experts.

“We have no right to be surprised by a severe and imminent stock-market crash,” says Mark Spitznagel, a hedge-fund manager who predicted his hugely profitable billion-dollar bet on the 2008 crisis.

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“We are in a gigantic financial-asset bubble,” warns Swiss adviser and fund manager Marc Faber. “It could burst any day.”

However, the stock-market fall has already begun. Last Friday, shares fell by the largest amount in two and a half years.

Accelerating the fall has been a sharp drop in oil prices.

Amazingly enough, these developments are happening at a time when the American economy is showing a strong rebound.

Faber doesn’t hesitate to put the blame squarely on President Obama’s big-government policies and the Federal Reserve’s risky low-rate policies, which, he says, “penalize the income earners, the savers who save, your parents. Why should your parents be forced to speculate in stocks and in real estate and everything under the sun?” Billion-dollar investor Warren Buffett is rumored to be preparing for a crash as well. The “Warren Buffett Indicator,” also known as the “Total Market Cap to GDP Ratio,” is breaching sell-alert status, and a collapse may happen at any moment.



So with an inevitable crash looming, what are Main Street investors to do? One option is to sell all your stocks and stuff your money under the mattress. Another option is to risk everything and ride out the storm.

But according to Sean Hyman, founder of Absolute Profits, there is a third option.

“There are specific sectors of the market that are all but guaranteed to perform well during the next few months,” he says. “Getting out of stocks now could be costly.”

How can Hyman be so sure? He has access to a secret Wall Street calendar that has beaten the overall market by 250% since 1968. This calendar simply lists 19 investments (based on sectors of the market) and 38 dates to buy and sell them. By doing so, one could turn $1,000 into as much as $178,000 in a 20-year time frame.

“But this calendar is just one part of my investment system,” Hyman adds. “I have also designed a Crash Alert System that is designed to warn investors before a major correction as well.” (The Crash Alert System was actually programmed by one of the individuals who coded nuclear- missile flight patterns during the Cold War so that it could be as close to 100% accurate as possible.) Hyman says if the market starts to plunge, the Crash Alert System will signal a sell signal, warning investors to go to cash.

“You would have been able to completely avoid the 2000 and 2008 collapses if you were using this system based on our back-testing,” he says. “Imagine how much more money you would have if you had avoided those horrific sell-offs.”

One might think Hyman is being too confident, but he has proven himself correct in front of millions of people time and time again.

In a 2012 interview on Bloomberg Television, Hyman correctly predicted that Best Buy would drop down to $11 a share, and then it would rally back up to $40 a share over the next few months. The stock did exactly what he predicted.

“A lot of people think I am lucky,” he says. “But it has nothing to do with luck. It has everything to do with certain tools I use – tools like the secret Wall Street calendar and my Crash Alert System.”

With more financial uncertainty than ever, thousands of people are flocking to Hyman for his guidance. He has more than 114,000 subscribers to his monthly newsletter, and his investment videos have been seen millions of times.

Yet not everyone is selling. One acquaintance writes: “Thanks for the advice, but I have lived through market falls before. Since the majority of my shares are in dividend reinvestment funds, and most of them are way up after 45 years of just sitting and reinvesting, I could not possibly sell all of them and turn them into cash as I would have a huge tax bill to deal with and, of course, the money to do it.

“Yet, when the market goes down, as it has several times since I got started, my dividends just purchase more shares, and in the end when it goes back up, then I have a larger profit in the stock. I have over 130 programs and could not think of selling all or even parts of them unless I need money, which I do not at this time. Maybe someday it will happen, as I cannot say. Stocks go up and down, and I do not look into each of them daily. I look when I write the dividend down as I get notices of them by mail.”

Joseph Morgenstern is a financial consultant and the publisher of the Israel High-Tech & Investment Report.

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