Big investors expect more crashes in the stock market

Aggressive rate hikes by the Fed and other central banks will continue to hit stocks. Big investors warn that rates at 4.5 percent at the end of the year will send shares down 20 percent.


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There is no peace for the markets. The tough policy of the Fed in its fight against inflation All hope of an upcoming recovery in the stock markets is fading. The road will be slow and even more dangerous for investors.

Rates will continue to rise high and fast, so after the Fed’s last 75 basis point increase and those remaining until the end of the year, the price of money in the United States at this rate will be over 4.5 percent. cent at the end of 2022.

alarms go off

This level has set off alarm bells among big investors, such as Ray Dalio, who has predicted a sharp fall in stocks as the Fed hikes rates aggressively.

“I estimate that an increase in rates to around 4.5 percent will produce a negative impact of almost 20 percent on share prices,” Dalio said, adding that when rates go up other markets go down and the economy will perform weaker than expected.

And it is that in his opinion, the Fed’s monetary policy will reduce the growth of private sector credit, which will reduce spending in this sector, which will have a great impact on the economy.

Dalio is not alone in expecting a continuation of the turbulence in stocks and bonds and an increase in the risks that the economy ends in recession.

Jeff Gundlach is more pessimistic than Dalio

Another well-known investor, Jeff Gundlach, goes even further and expects a further 25 percent market decline due to Fed policy.

He is in favor of maintaining an even more bearish strategy and advises buying long-term Treasuries, but not now, at the end of 2023 at the earliest.

At the moment, the outlook is more volatile, so investors who choose to remain in the market will have to adapt to this reality.

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Big investors expect more crashes in the stock market