Many investors have been wondering if another stock market crash will occur. There is an easy answer for that.
Whether that is a week, month, or years from now is the real question. However, many analysts predict that at least another market crash is expected in the near future. While we can’t predict when that might happen, there are some indicators that could indicate another stock market crash is coming.
By looking at what has already happened, perhaps we can discover what to look for. After all, history repeats itself.
Stock market crash: the why
While no one could have predicted the virus, many analysts believed a stock market crash was looming. Another factor was the oil and gas sector. The price of oil had been falling for years, but then came to a complete stop, with Russia and Saudi Arabia creating an oil price war with the Organization of the Petroleum Exporting Countries (OPEC).
However, in addition to all this, there was a bad economic situation that had worsened since the last financial crisis. Unemployment increased, the US Federal Reserve announced an inverted yield curve, and there has been a large increase in corporate indebtedness.
Gross world product rose from 84% a decade ago to 92%, about $ 72 trillion. As the economic climate worsens, companies are unable to pay debts or refinance them, causing the restructuring we have seen.
The present
It looks like there are now some pink glasses on the markets today. The collapse of the stock market is practically rear-view for many, with a rebound underway in recent months. But many analysts warn that investors are falling into the “bear market trap.” Many believe that the economic situation has changed when it really has not.
Part of the rebound came from the news that jobs were added and that a vaccine may be on the way. But a vaccine is not yet available, and hundreds of thousands of jobs are not replacing the millions of people in Canada with fewer or no jobs. That is why analysts believe that markets will continue to fall until July.
Whats Next?
The end of June means more earnings reports will come out, and more restructuring is likely. Overall, not much has changed. Oil and gas prices remain weak. The coronavirus continues to be a large part of our daily life. Countries are still struggling as debt rises and companies weaken.
Large and small companies will have to make more cuts if there is any hope of survival. This is likely to lead to poor earnings reports and poor stock price performance. So yes, I would say that before the summer is over we are going to see another stock market crash.
How to prepare
There are a few things you can do to prepare before the next crash. First, sell stocks if you need money in the next year or so. Make sure you can pay your bills before anything else. Then make sure your stocks are in solid companies that will come out of a crisis well, even if that means depression for now. And finally, have some cash on hand to invest in some better companies in case the market falls again.
If any action comes out strong, it will be Royal Bank. In the meantime, you get a solid 4.68% dividend yield, which actually boosted the latest earnings report.
While we cannot fully predict the next stock market crash, we can always prepare. For now, stay firm and know, no matter what the markets eventually recover.
The post This is when the stock market crash will happen first appeared in The Motley Fool Canada.
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