Is a Stock Market Correction Coming Soon?
Is a big stock market correction coming? Notice any patterns?
The stock market has recently reached an all-time high, and many people are looking at their brokerage accounts and celebrating. However, I wouldn’t pop the corks on those champagne bottles just yet. There’s a chance that this bubble is about to burst with a big stock market correction on the horizon.
A fifteen-year look back at the S&P 500 might shed a little light on why many financial professionals believe a correction is coming.
Notice any patterns? Each of these peaks in value was built on a market bubble. We had the “dot com” bubble in 2000-2001, and the sub-prime lending bubble in 2007-2008. Each of those bubbles burst and was followed by a sharp correction in the market.
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Stock Market at Risk; New Indicators Reveal a Sputtering Economy
Anemic growth barely hovering above zero in the first quarter of 2014 exposed the depths of a lingering and persistently weak U.S. economy. Gross Domestic Product edged up by a scant 0.1 percent, the slackest pace of growth since late 2012.
New Factory Orders gained just 1.1 percent in March, missing expectations of a bounce from a 1.5 percent rise in February. Wages were flat in April compared to March, with the average hourly wage for private sector workers settling at $24.31—a 1.9 percent from April 2013. The average workweek at 34.5 hours was also unchanged from March, though it was up slightly from April 2013.
Stock market reaches all-time high, but now is not the time to celebrate
The stock market has recently reached an all-time high and has many looking at their 401Ks and celebrating their exceptionally good fortune. However, I wouldn’t pop the corks on those champagne bottles just yet. There’s a chance that this bubble is about to burst.
The question is why is the stock market so high when so many other economic indicators are performing poorly or are in a downright tailspin?
Fox News reports that household income levels have dropped by a significant 8.2% in the last four years. Drudge reports that 8.5 million Americans left the labor force during that same time period while unemployment remains unacceptably high at 7.9%. It was suggested on Forbes that the real unemployment rate is somewhere in the neighborhood of 14.7%. USA Today reports on the anemic growth of the US GDP. Even Forbes asks the question, “Why is Wall Street winning right now and everyone else seems to be losing?”
So, how do you safely avoid stock market risk?
See our newly updated video series “Securing Your Retirement Future” to find out.