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It’s never easy to predict when a stock market crash will occur. But one thing is certain: the next stock market crash is unavoidable – because every boom leads to a burst. Recently, several market veterans and financial analysts have been sounding the alarm for a major correction, arguing that valuations have hit extreme levels. Many of them are currently saying that inflationary pressures will be the cause of the next crash and, unlike any of the previous situations, inflation won’t cause mere “temporary” disruptions on the market’s outlook. As the inflation crisis has started to spiral out of control, they now worry we’re now headed to something much worse: An epic inflationary collapse that will pop all asset bubbles. This means today’s speculative and highly-leveraged stock market has its days counted and literally everyone who predicted previous crashes is warning that the next one may arrive sooner than most people think.
The combination of massive government debt, asset bubbles, and bad demographic trends has created a weakness in financial markets. The head of Scion Asset Management, Michael Burry, who became famous after his winning bet against mortgages was featured in the movie “The Big Short,” issued another series of tweets warning investors about losses in “the size of countries” in case crypto and meme stocks sharply decline. He alerted that those who are now buying meme stocks and cryptocurrencies are signing up for devastating losses. And everything Burry says is closely watched by the meme-stock crowd that follows him on Twitter ever since he took a bullish position on the video-game retailer GameStop in 2019 – which helped to set the stage of the epic stock market frenzy led by retail investors earlier this year. However, his views about those stocks have changed and evolved into warnings about dangers in the market.
“If I put $GME on your radar, and you did well, I’m genuinely happy for you,” he wrote. “However, what is going on now – there should be legal and regulatory repercussions. This is unnatural, insane, and dangerous”. “All hype/speculation is doing is drawing in retail before the mother of all crashes,” the investor warned in a recent tweet. “When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries”. Moreover, the investor also sounded the alarm for all crypto fans who have been recklessly borrowing just to purchase their favorite coins. “The problem with #Crypto, as in most things, is the leverage. If you don’t know how much leverage is in crypto, you don’t know anything about crypto,” he tweeted. Burry isn’t alone in his recent warnings about the imbalances in the stock market.
Warren Buffett, Harry Dent, JohnHussman, Jeremy Grantham, Jim Rogers, Jeffrey Gundlach, Mark Yusko, and many others, are also calling for a sizable crash. Even Bank of America said earlier this year that the S&P 500 would likely return to an average of 2% given how high valuations already were at that point. Another recent forecast came from no one less than the renowned geopolitical and financial cycle expert Charles Nenner. In a recent interview with USAWatchDog’s Greg Hunter, when asked how low could the market go, Nenner said: “20,000 or lower is my call”. Spooked, Hunter asked Nenner if he honestly thought the market could get cut in half, to which Nenner promptly replied “yes.”
Evidently, the catalyst for the next crash will be inflation. Although the Federal Reserve keeps insisting that inflation is “transitory”, Nenner maintains that since it is already here, it will only get much worse. In the face of rising prices across a wide range of goods and services, it feels like we already are witnessing the impacts of inflation on a daily basis. But what all of those experts have been trying to put in between the lines is that what we’re going through right now, even though it is incredibly overwhelming, it is just a taste of what is coming next. The only question remaining is at what point does the mounting risk of a crash become too unbearable? And it seems that many investors are willing to learn the answer the hard way.