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The next market crash is just around the corner! My guess: 2016

themarketprofessor

Joined
7/29/14
Messages
47
Points
18
Evidence has been overwhelming and growing - high price-earning ratios, historic low levels of volatility, over-complacent investors...the spread of the Wiedemer disease. The next stock market crash could be just around the corner. As i prepare for the “unthinkable”, i want to ask the audience of this forum questions: Can we avoid it and how? Are we contributing for it to happen? Can financial maths and models predict and prevent?
 
One question just popped out of my mind, If math/models cant help prevent it, Its cause the very nature of these tools or cause they cant counteract all the deeds from all the agents in the market? Allegedly, the models "model" the reality to sort of 'seize and handle' it.
 
I made 50% of my portfolio "recession-proof" just this past Friday, by investing in stocks that outperformed during 2008. I just started trading in May so I appreciate all advice. Btw I have a cash account so no shorting for me (I think).

I think a crash is happening this year.
 
Goodluck, Anik.

You may want to check and find out if the CEOs or managers, who ran those listed companies back in 2008, are still around. If not, the performance of their stocks may not be the same in the next market crash. People come and go, so do stocks!
 
Interesting point to evaluate. Definitely something for us traders and investors to think about. I will investigate this notion further. Thanks for pointing it out and giving a date for it too.
 
I think math/models can help us prepare for it a little bit better, but they can't predict or prevent them.

I think the development of the model really comes down to wisdom. Back in 2007, it was customary to exclude tail cases from economic statistics as outliers and to assume that most random variables were normally distributed and had Gaussian copulas. That wasn't necessarily a very wise move in retrospect.

I think we've gotten a little bit wiser and we are a little better prepared for a market crash. The math and stats are tools that can help, and our tools for dealing with outliers and events have improved over the past 6 years.

That said I think the secular bull is getting a little tired at the 5 year mark. A reasonable, orderly pullback ala 2001 would be healthy at this point and would not be a huge surprise. Another crash just 5 years after our last one would be a big surprise.
 
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