global stock markets are at a “precipice” (a potential cliff)

Notice that on the far right of this 12 month chart of a global stock market index (of the stock prices of 5,000 companies  worldwide), prices have dropped to near the 21,000 level three times in January, so far rallying back twice. Will they rally again? Perhaps, but if not, then a massive sell-off is likely (with an immediate surge in volatility).

 

wilshire 5000 year

 
Note also that the net change as of today since early July is “no change.” The last seven months have been quite weak relative to most of the last 10 years (shown below). The risk levels in current stock markets globally are currently exceeding the risk levels at the peak in 2007, at least according to certain ratios.

wilshire 5000 decade

A plunge may not develop Monday or next week, but, with risk levels so extremely high, this is a great time to move toward conservatism (away from the familiar complacent methods that produced massive losses  for most mainstream investors in 2008). There are a variety of simple methods to reduce risk or even to position in ways that would enormously benefit from another global stock market selling frenzy. Anyone who has questions about how to assess risk, reduce risk, and increase opportunity is welcome to contact me.

 

 

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One Response to “global stock markets are at a “precipice” (a potential cliff)”

  1. The August plunge: assessing risks and opportunities in investment markets | power of language blog: partnering with reality by JR Fibonacci Says:

    […] Next, let’s briefly review my recent forecasts regarding the US stock market. On Jan. 30th, 2015, I published the article which you can read here: https://jrfibonacci.wordpress.com/2015/01/30/global-stock-markets-are-at-a-precipice-a-potential-cli… […]

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