2016 Stock Market Crash?

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Brandon Hall
CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
11y

@Peggy Liu  Paul Farrell has been "predicting" a stock market crash for years. His logic is likely: if every year I predict a crash will occur, eventually I'll get it right and be called a genius.

You need to remember what his main goal is - to garnish viewers for his publisher. He likely gets paid on a "per click" basis so he writes sensational articles that will be quickly shared and drive up his income. Anytime you see a journalist write something, take a few minutes to verify and also seek out second opinions and differing opinions.

There is always a chance that the market could crash and you can always take measures to mitigate downside risks. Specifically, you can buy put options or invest in volatility funds so that you can earn on the downside (especially if you don't want to deal with short selling). People that don't know how to utilize these vehicles are the ones that get burned badly.

You can make money in any economic environment, so instead of being fearful, figure out how to do it. Take the emotions out of your investing and be prepared for various scenarios and market movements. Take Floyd Bostwick Odlum for example. The guy made millions during the Great Depression. There was also another trader who made millions during the Depression though his name is eluding me right now.

Anyway, to prove my point that Paul Farrell is likely a nut job, here are a few of his articles over the past few years "predicting" the upcoming crash:

1. Article written in 2008 predicting a 2011 crash:

http://www.marketwatch.com/story/well-great-depres...

2. Article written in 2011 speaking about impending doom:

http://socialistworker.org/blog/critical-reading/2...

3. Article written in 2013 claiming a massive crash is on the horizon:

http://investmentwatchblog.com/paul-b-farrell-the-...

4. And a Business Insider article calling the guy insane (which I agree with):

http://www.businessinsider.com/is-marketwatchs-pau...

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  • Ken A.
    Investor · Lake, FL · Member since 2015 · 121 posts · 28 votes
    11y

    Right now, the "risk - reward" ratio is horrible in the stock market.  Year 7 of gains...really, some adjustment is necessary to clean out excess Greed.

    0Reply
  • David Avetisyan
    Rental Property Investor · Glendale, CA · Member since 2013 · 685 posts · 334 votes
    11y

    I would love for the market to crash, but I feel it's a bit too early.

    I say somewhere between 2019 - 2020 we see the bubble burst. 

    We had an extensive conversation somewhat related to this topic Here

    I can speak for SoCal and things here are RIDICULOUS!

    0Reply
  • Fred Conway
    tampa, FL · Member since 2014 · 86 posts · 23 votes
    11y

    a correction is occurring right now, big losses the past few weeks. With greece and interest rates uncertain, looks like the rest of 2015 and early 2016 would be a bad time for stocks. Stocks are dropping after reporting big earnings. The whole market is wild. 

    0Reply
  • Account Closed
    Inland Empire, CA · Member since 2012 · 63 posts · 12 votes
    11y
    Originally posted by @Peter John K:

    I actually hope it does crash in 2016 because than i will have made enough money in 2015 to buy in for the long holds... I play the market all the time but I am young and far from wealthy so I'm a gambler and stick to options and go in and out very fast i have gone in and out of higher and lower tax brackets over night.... 

    the market could crash this year and many say we are in for an earnings recession and in my view it could be any day bc if you just google S&P500 and look at the chart in max view you will see from as far back as it will show up up up up down down up up up up down down up up up up etc...... we are due for a major correction soon although i think markets will rally some more this year and this coming earnings will generally be poor but not as poor as predicted so the market will be looking good and the FED will raise rates at the end of the summer than yea after the holidays things will be super slow higher rates higher costs and with the oil prices and political movements more volatile than shares of tesla maybe yea a big crash and some people will lose it all while some people will be buying it all waiting for the next upswing its the cycle of life...

    Craziest thing i ever read about the stock market was that SEC halted trading on a bunch of medical marijuana stocks that were trading on the OTC market and i said WAIT WTF theres public pot corps lol i mean who would buy a medical marijuana stock... forget cooking the books what happens when the DEA burns the books so how does that work.... so aslong as there are people dumb enough to invest publicly in a company that is operating in a risky federally illegal business than yea the stock market can crash any day of the week for just about any reason...

    I love what you wrote!  :-)

    0Reply
  • Scott W.
    Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
    11y

    dollar cost average in a stock index fund (total stock market or s&p 500 index fund) in a 401k. if something is crashes, try to buy more.

    I purchased $1000 when we had that 500-1000 point drop in the dow a month ago. just gotta make sure you have enough in your emergency fund. :)

    0Reply
  • Gino BarbaroPro Member
    Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    @Peggy Liu

    Hi Peggy

    That's why most real estate investors are in the business.  We have control over our investments, unlike owning shares of Apple.  I think multis have been getting bid up and cap rates have been falling due to the unstable market.  Money follows a return and we are fortunate that rents are going up 3%.  These factors are bidding up the prices of properties, so it is getting more difficult to "Buy Right"

    What do you think is going to happen to the market?

    Podcast Guest on Show The “Conveyor Belt” System That’ll Build You a BIG Rental Portfolio Quickly
    0Reply
  • Peggy Liu
    OP
    Investor · Los Angeles, CA · Member since 2013 · 354 posts · 98 votes
    11y

    @Gino Barbaro  Honestly, if I know what will happen with the stock market, I'd be investing in it.  Most of my investments are in real estate.

    0Reply
  • Gino BarbaroPro Member
    Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    I meant to say the real estate market.

    Sorry

    Not even the gurus know what will happen to the stock market.  The key is to watch the flows of money, which is difficult if you are an individual investor.  Still hard for the pros.

    What type of real estate do you invest in?

    Podcast Guest on Show The “Conveyor Belt” System That’ll Build You a BIG Rental Portfolio Quickly
    0Reply
  • Adam St. Jean
    Alna, ME · Member since 2015 · 2 posts · 4 votes
    10y

    I see not many people here believe it will crash. Makes sense considering most people here own real estate. I know it will all collapse. I know that from math. Look at what the top economists are saying. Whether its 2016, 2017, or 2018, the only way to stay afloat is to inflate the economy even more. What happens when we can't afford to even pay the interest on the massive debt? Look at what is going on in China as well as other nations and you will see that the dollar is going down. The truth about the coming collapse is very easy to understand if your open to the possibility. If you don't want to look at the numbers and real evidence then you don't see that gold and silver is where it is at when the collapse happens. I am holding precious metals until it collapses then investing in real estate. Anyone else doing the same I encourage them to message me. 

    2Reply
  • Mark Nolan
    Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    10y

    I invest at least 10% of my investment portfolio in metals for hedging purposes not income. 

    0Reply
  • Eric D.
    Rental Property Investor · Boston, MA · Member since 2015 · 19 posts · 23 votes
    10y
    Originally posted by @Adam St. Jean:

    I see not many people here believe it will crash. Makes sense considering most people here own real estate. I know it will all collapse. I know that from math. Look at what the top economists are saying. Whether its 2016, 2017, or 2018, the only way to stay afloat is to inflate the economy even more. What happens when we can't afford to even pay the interest on the massive debt? Look at what is going on in China as well as other nations and you will see that the dollar is going down. The truth about the coming collapse is very easy to understand if your open to the possibility. If you don't want to look at the numbers and real evidence then you don't see that gold and silver is where it is at when the collapse happens. I am holding precious metals until it collapses then investing in real estate. Anyone else doing the same I encourage them to message me.

    Adam, I as of recently have been starting to gear my investing towards precious metals/ oil & energy. They are both very low right now and I hope they will have a converse reaction when the main stream markets crash. Who knows how bad the next recession will be or even what triggers it but for certain it will happen. 

       A sign has come to me last month at a 4 Family open house. The property was very distressed and needed every unit to be completely renovated. There must have been almost 30-40 people touring the property and I recognized 2 locals that I am certain have no experience in renovations or even real estate. A bidding war resulted and the place came under agreement for a price where no one can possibly make any money. This has been a common theme as of lately here north of Boston Massachusetts. I feel like the market is topped out and too many very rookie competitors driving the prices.  This is a scary thing and it translates to me "Get to the sidelines and watch this bubble pop".

    0Reply
  • Mike HurneyPro Member
    Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
    10y

    @Eric D.

    "There must have been almost 30-40 people touring the property and I recognized 2 locals that I am certain have no experience in renovations or even real estate. A bidding war resulted and the place came under agreement for a price where no one can possibly make any money."

    So How much did you end up paying?

    0Reply
  • Max James
    Investor · Cincinnati, OH · Member since 2015 · 229 posts · 50 votes
    10y
    Originally posted by @Peggy Liu:

    Thanks for the feedback guys.  I was just wondering what you folks thought about the article.  I did buy a property in early 2007 and it hasn't done well in the past 8 years but oh well... I have learned and I know that in the long haul, it doesn't really matter.  This time, I want to position myself better and possibly take advantage of investing after the crash.

     When you say you bought at this time and it hasn't done well, are you just referring to the appreciation portion?  I'm assuming this was a primary home not a buy and hold rental property?  I don't understand how a buy and hold rental property can instantly turn into a negative cash flowing cow so long as it was bought properly in the beginning.  

    Just trying to educate myself more on what happens to us buy and holders when the housing market crashes :) Thanks!

    1Reply
  • Peggy Liu
    OP
    Investor · Los Angeles, CA · Member since 2013 · 354 posts · 98 votes
    10y

    @Max James  I bought it at the peak of the market.  I knew NOTHING about RE at the time, absolutely nothing.  I had bought it at a negative cashflow.   

    1Reply
  • Adam BartomeoBusiness Member
    Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
    10y

    Our economy naturally has expansions and contractions. A crash is just a natural occurrence of a capitalist society. A economical crash traditional happens every 5-6 years but has been taking longer over the past couple of decades. We are currently in year 6. 2016 will be year 7 of expansion.

    Also, a contraction happens more in a presidential election year then non- presidential election years. There is other data that show we will have another recession soon.

    I think it will occur in 2017 but can easily happen in 2016.

    [email protected]239-339-3969
    Bartomeo Property Management4.7150 Reviews
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    0Reply
  • Max James
    Investor · Cincinnati, OH · Member since 2015 · 229 posts · 50 votes
    10y

    I personally trust the Robert Kiyosaki predictions and he also says there will be a crash next year.

    As for how this affects us as a REI, it must be the potential for a reduction in rental prices in some real estate markets. What has happened to rental prices in markets when the stock market crashes?

    1Reply
  • Mike F.
    Investor · Denver, CO · Member since 2015 · 570 posts · 521 votes
    10y
    Originally posted by @Jared Lichtin:

    I worked in oil & gas for a long time, and I think the fact that oil prices are still low is supporting the market.  That being said, if things take a turn for the worst in the Middle East, oil prices go up, and we are in an election year (unpredictability) Things could get real bad for the stock market next year. 

    I don't invest into the stock market, I buy companies. To address your concerns just look toward energy companies with share prices that have been beaten down due to cheap oil prices, what happens to their share prices when oil goes back up? There is your answer. You don't invest in the market, you invest in specific companies.

    0Reply
  • Mike F.
    Investor · Denver, CO · Member since 2015 · 570 posts · 521 votes
    10y
    Originally posted by @Max James:

    I personally trust the Robert Kiyosaki predictions and he also says there will be a crash next year.

    As for how this affects us as a REI, it must be the potential for a reduction in rental prices in some real estate markets. What has happened to rental prices in markets when the stock market crashes?

     The stock market alone isn't powerful enough to effect rental prices, you have to have more powerful forces at work, multiple forces to effect rental prices. Supply and demand drive rental prices much more than the stock market.

    0Reply
  • Chris Reed
    Plano, TX · Member since 2015 · 59 posts · 29 votes
    10y

    Haven't read all the previous posts, sorry.

    Based on information I can't share (sorry), I'm projecting an 80% drop in the US dollar over the next 2-2.5 years.  That will send the cost of hard assets through the roof and kill the service industry.  The markets that will increase in value will be real estate, natural resources, and food production.  That being said, the if the industry increases 200% and the value of the dollar is 30% of what it is now, does that help?

    Anyway, that's just my projection.  I've been called crazy more than a couple of times, that's alright.  My family's finances will be prepared for the fall.

    0Reply
  • Jeff Robert
    Real Estate Agent · Grand Rapids, MI · Member since 2016 · 127 posts · 56 votes
    10y
    Originally posted by @Mike F.:
    Originally posted by @Peggy Liu:

      This time, I want to position myself better and possibly take advantage of investing after the crash.

    Cash is King.

     Tell that to the Weimar Republic.

    0Reply
  • Louis Bratton
    Cary, NC · Member since 2015 · 32 posts · 7 votes
    10y

    This article I just read was very good. It points out a big issue for folks buying at the actions competing with hedge funds.  As long as we are buying based on fundamentals i wouldn't worry.  

    http://davidstockmanscontracorner.com/housing-bubble-2-0-heres-why/

    0Reply
  • Alex J.
    Investor · Tarzana CA and Houston, TX · Member since 2015 · 326 posts · 130 votes
    10y

    No crash yet

    2Reply
  • Adam Christopher Zaleski
    Investor · Pueblo West, CO · Member since 2014 · 310 posts · 213 votes
    9y

    During the last housing market crash, real estate value dropped by 50%. However, rents only dropped by 15%. Even if my rents dropped by 15%, I would still be doing just fine. If rents dropped by 50%, I would still be able to cover my mortgages. If rents dropped by 60%, I would have to start funding them with some of my W2 income.

    0Reply
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