The closer we get to September, the more all of the markets seem to be losing their footing. The markets have been correcting relentlessly, and when it comes to conspiracy and speculation and it starts to affect your wallet, it’s all relevant.
As many of you might know, there is a great deal of concern for a number of individual, significant events that all happen to be culminating in September. I’m not one to be too conspiratorial, but even a small amount of people concerning themselves with a few of these events can perpetuate a self-fulfilling prophecy. With the U.S. stock market being 7 years off from its last recession/crash, cyclically, the economies are due for a correction. Because of the amount of fear that is being anticipated due to the great month of September 2015, even if the market wasn’t “positioned” to sell off, the fear of a collapse is turning into a self-fulfilling prophecy.
Some of the September madness has to do with the Jade Helm military exercises being scheduled to end, the deadline for congress to vote on Obama’s deal with Iran, and a substantial meeting where the Pope is meeting with the president and congress. In September, we’ll also see the last of the four blood moons that fall on Biblical festival dates during 2014 and 2015. Also in September is the ending of the Shemitah year, which to many people is happening all too coincidentally. There is even a decent amount of speculation about an asteroid or a meteor that may or may not be heading toward our planet next month. The global uncertainty is very alarming. As China is slowing down and Greece and the rest of the Eurozone are just in terrible financial shape, it all seems like doomsday. Now, when you throw in the record droughts, climate change, and natural disasters that we are seeing, it has all been implanting fear into the markets, and we are seeing them respond to all of this.
Already, the stock market has been going into a collapse mode, with multiple days falling into negative territory. The uncertainty of the market is unknown.
I personally don’t know exactly what the exact events are going to show, but what I do believe in are self-fulfilling prophecies. If investors are scared, people sell. When prices fall, more people sell in fear and the start of a chain reaction gets kicked into high gear.
One of the things I’ve advocated for over the last year and a half is to have a healthy position in cash. I remember hearing Jim Rogers, at the end of 2013, make a statement that stuck with me which was, "I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime."
I couldn’t help but feel that 2015 was going to be at least the starting year of the great correction in the financial markets, and opportunities were going to significantly present themselves as the Dow Jones kept bouncing off of 18,000 and the S&P around 2,100. But the downward trend could just be getting started, and it might take another 6 months for stocks to completely bottom out.
Stock valuations are getting more and more attractive, but don’t think that you need to rush into anything immediately. Keep in mind this is just the beginning, and downtrends take time to play out.
An interesting note is that an official recession following a stock market crash is likely, and we have yet to see our economy enter a recession/depression at 0% interest rates. There is no ammo and no precedence for what is setting up to happen here in the states.
With oil below $40, precious metals significantly depressed, the junior mining sector getting decapitated, and overall stocks in the process of getting pounded, the opportunity to buy up cheap assets over the next 3 to 6 months could be epic, with deals across the board. The only area that I expect to move slowly is the real estate market, since it is so much more of a slower-moving sector.
Be prudent and be ready for these opportunities to present themselves.