Experts warn: US stocks are about to "reset", with a potential 50% drop in the next year
Experts warn that the US stock market is about to enter a bear market and reset, with a projected 30%-50% decline in the stock market in the next year. This expert indicates that the rise in defensive assets such as precious metals, energy stocks, and industrial stocks suggests that the bull market is coming to an end, and investors should be cautious of stock losses. In addition, the strong performance of industrial stocks also implies an economic slowdown. The possibility of the US economy entering a recession is 58%
According to the Zhitong Finance and Economics APP, Chris Vermeulen, Chief Investment Officer (CIO) of Technical Traders, has warned that the U.S. stock market has been in a long-term bull market, but there are signs indicating that it will eventually lose momentum, leading to an inevitable bear market and a challenging "reset."
The investment executive mentioned the recent rise in defensive assets such as precious metals, energy stocks, and industrial stocks. Vermeulen stated that these sectors typically perform well in the later stages of a bull market, with a bear market or "financial reset" inevitably following the bull market.
He predicted that investors may be heading into another bear market, similar to the bear markets following the dot-com bubble and the 2008 financial crisis. He cautioned that this could ultimately result in painful stock losses for investors, with people's wealth potentially shrinking by up to 30%-50% in the coming year.
"I believe we are entering a major market top, more or less a financial reset," Vermeulen said on Tuesday. "This is short-term, temporary pain. But we need to reset the market. In order for the market to continue to rise, we need regular pullbacks and adjustments."
Vermeulen noted that this reset could also be accompanied by an economic recession, especially as industrial stocks suggest an economic slowdown. Despite the industry's strong performance in recent months, industrial product buyers typically upgrade equipment at the end of an economic growth cycle due to "significant delays" between business slowdowns and new machine orders.
Referring to U.S. companies, Vermeulen said, "They are not aware that we are at the end of a growth cycle, the music is about to stop." "Industrial stocks continue to rise strongly. They are hitting historical highs, which is a sign that we will eventually see these companies start to slow down their growth."
Investors remain concerned about a potential economic recession, especially with high inflation and the Federal Reserve seemingly prepared to maintain high interest rates for a longer period. According to the latest estimate from the New York Fed, there is a 58% chance that the U.S. economy will enter a recession by March next year