In this article I’m going to cover 3 things around stock market crash predictions for 2018:
- Is the stock market going to crash?
- When will we see the next market crash?
- What can you do to protect yourself?
When talking to people at my live events, they often tell me that they worry about the next stock market crash. They worry that they will lose a good chunk of their retirement account – again as some already did in 2008. They ask me, “How can I protect myself from the next crash. Is it coming? And if so, when?”
So let’s get started and take a look at the facts around stock market crash predictions for 2018.
Right now, we are in the longest bull market in history.
This means that there has NEVER been a time like this when the market continues to go higher and higher. Every week we are making new record highs.
But what goes up must come down, and the question is…
When will it end? Will there be another crash?
The answer? ABSOLUTELY!
Of course there will be another crash. The market has to correct every now and then.
A “correction” means that the market retraces by at least 20%.
Take a look at this chart showing all market corrections since 1946:
What do you notice?
Every few years there’s a correction. Some are more significant than others, but on average, there has been a correction every 6 years.
Right now it’s October 2018, and we haven’t had any corrections since 2011.
So this brings us to the next question…
When will we see a correction?
Well, the signs are already there!
Right now, the interest rates are at the highest level since 2011.
High interest rates are bad for stocks, and I’ll tell you why.
When interest rates are high, investors prefer to put their money in high-interest CDs or Bonds instead of the stock market. They move their money out of the stock market and into “safe investments.”
How do they “move” money? They are selling stocks to get some cash.
And what happens when a lot of people are selling? The price of stocks goes down.
The economy looks strong. Last week the unemployment rate was at 3.7%. We haven’t had an unemployment rate this low since 1969.
As the economy gets stronger, the Fed will keep raising interest rates. Most likely they will raise interest rates again in December. And that’s bad news for the stock market.
So what can YOU do to protect yourself from a downturn?
There are 3 things you can do right now:
- The first thing is doing nothing, which is the absolute worst thing to do. If you own stocks, a 401K or an IRA, and you do nothing, your portfolio will crash when the stock market crashes. And as you have read earlier, the stock market could easily crash 50%.
- The second thing that you could do is buy long-term put options. They’re called LEAPS and will make you money when the market crashes.
- The third is to learn how to trade stocks and options. In my opinion, this is the best thing to do.
Know that there’s a difference between trading and investing.
When trading, you’re only holding a stock or option for 5-15 days. That’s it. There’s no “long-term investment” you get in and out quickly. That’s what I do. I don’t have any “long-term stock investments” in my portfolio. I trade, and I take advantage of the small moves that the stock makes.
The best part about trading is that you can make money when the stock is going up, and you can also make money when the stock goes down – especially if you know how to trade options.
Stock Market Crash Predictions for 2018 – Summary
- Is a Stock Market Crash coming? – ABSOLUTELY!
- When will it come? – SOON. The warning signs are here!
- What can you do?
You can do one of 3 things:
- Do nothing
- Buy LEAP Puts
- Learn how to trade stocks and options (which in my opinion is the best!)
What will YOU do?
Leave a comment below and let me know how YOU plan to protect yourself from the next stock market crash.