MV Classic: ACHTUNG! POTENTIAL MARKET MELTDOWN AHEAD!

October 15, 2019

Recently, a considerable number of highly reputable professionals and heads of large institutions have come out with unusually clear and stern warnings about what lies ahead in the economy and the markets. The Royal Bank of Scotland, the BIS, JP Morgan, just to name a few, have all issued warnings about the likelihood of a major slump or even a crash in global financial markets - notably the stock and credit markets – before we reach the summer of 2020.​

 

Note: The following text was originally published in the Mountain Vision Newsletter in September of 2007. We are posting this article as part of our blog’s “Mountain Vision Classics” series. After all, history might not repeat itself, but it does rhyme. While a few years old, we feel that the thoughts presented back then are worth revisiting and somewhat accurately reflect where we stand today – once again, dangerously close to a market meltdown!

 

 

 

ACHTUNG, GEFAHR! POTENTIAL MARKET MELTDOWN!

 

In Switzerland, as in any mountainous region, summer thunderstorms tend to erupt at higher altitudes around the mountain peaks. Thus, it is not uncommon to have perfectly calm and sunny weather down below, while large masses of rain will already be falling higher up.

 

Locals and experienced outdoor folks know the implications. Swimming in alpine rivers under such circumstances is not a good idea. Every summer, we hear of unfortunate tourists drowning when they find a calm and picturesque river suddenly turning into a tidal wave and deadly trap.

 

Locals and experienced outdoor folks know the implications. Swimming in alpine rivers under such circumstances is not a good idea. Every summer, we hear of unfortunate tourists drowning when they find a calm and picturesque river suddenly turning into a tidal wave and deadly trap.

 

An old saying reminds us that, “You needn’t swim in the river to drink its water!”

 

This very basic and common-sense wisdom actually applies to all aspects of life. And it certainly applies to current financial markets. In the short-term, either in September or October, we expect a retest of the August lows in equity markets.

 

Beyond that, our expectations are dependent on a multitude of factors. It is possible that stock markets at that point could go back into another “bull-market” type rally. However, in view of the overall issues as discussed in our Global Economic Highlights, the downside risks outweigh the upside potential in “mainstream equity allocations” by far. We are increasing our liquidity and decreasing stock market exposure, even in our favored themes of precious metals mining, energy, and commodities.

 

Remember, managing risk and protecting your assets needn’t result in low returns, not in the short term, and certainly not in the long term. To the contrary, those who protect their assets today will be the ones to benefit the most from the potential meltdown tomorrow. This is not the time for procrastination, nor is it the time to run with the sheep.

 

We recommend you benefit from our version of INTREGRATED WEALTH PRESERVATION. It considers not only the risks and opportunities of financial markets, but also integrates equally (if not more) important structural considerations to achieve solid legal protection from litigation, confiscation, and other key risks that can reduce or destroy your wealth.

 

For help in your decisions, do not hesitate to call us at +41 43 366 2200 or send an e-mail to our Team at BFI Consulting. Our Client Advisory Team is here to help you prepare for the challenges expected for the fall.

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