Is a stock market crash like 2000 possible?

Real Investment Advice/Michael Lebowitz/12-1-2021

image of bear peaking from behind a tree“Whether they know it or not, investors are betting the Fed continues to levitate the market. Can stocks remain at extremely lofty valuations while lacking fundamental backing if the Fed continues to reduce QE purchases and ultimately raises interest rates? Essentially the real gamble investors are taking is that inflation will be transitory.  If high inflation is persistent and not transitory, the Fed will find it increasingly challenging to continue current policy. Without the Fed’s enormous liquidity, valuation gravity will reassert itself.”

USAGOLD note: So what’s in your portfolio? Are you all-in? Or are you properly diversified? Lebowitz says that odds favor a fall in the S&P 500 Index to 2650 from the current 4700 level.

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