Is A Market Crash Imminent?

1 minute read

I’m not in the habit of burying the lede, so let me give you the gist:

Yes, I think a market crash is imminent. I predict that it’ll likely happen in the next few months (if not sooner).

How I Did This

There are smarter people that I who have attempted to answer this question, and so what I’ve done is to aggregate their responses, and find the source data that they reference. I then study this in-depth, filter out the data that is unreliable, and form a conclusion based on the result.

I’m analyzing responses from:

  • ARK Invest’s Cathie Wood
  • Lyall Taylor

I base my conclusion on the following criteria, in descending level of importance:

  1. Bullish sentiment is high
  2. Market is already at the all time high
  3. Economy hasn’t recovered
    • High unemployment
    • Despite high interest rates

In the sections below, we’ll review each one in detail — and consider not just the current values of each metric, but also how it’s trending to help us know if it’s getting better or worse.

Analyzing the Data

Bullish sentiment is high

  • Buy high, sell higher (game of musical chairs)
  • Increased pace of IPOs

Market is setting new records, and has been for a while.

  • Company valuations, especially for Mega Caps, is absurd (based on FCF method)

Interest rates are already historically low

, in an attempt to boost the economy following COVID19.

Federal Funds Rate

Federal funds rate, set by the Federal Reserve, is at 0.09%

COVID19 is not over, actual economy isn’t doing well