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The S&P 500 is likely to plunge 44% to a four-year low, Paul Dietrich said.
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The top strategist explained that selling stocks well before they crash can generate outsized returns.
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Dietrich predicted a mild recession in the United States this year, based on multiple warning signs and threats.
The stock market could be headed for a 44% crash – and an early withdrawal could pay off, Paul Dietrich said.
The chief investment strategist at B. Riley Wealth Management moved his clients from stocks to bonds in 2000, and from stocks to cash, bonds and gold in 2007, he recalled in his report ‘april. market commentary.
Dietrich’s clients were unable to benefit from a massive rise in stocks over the next year. But they also escaped the terrible blows of the collapse of the dot-com and housing bubbles that followed.
They ended up gaining 7% before fees during the 2000-2002 recession, when the S&P collapsed 49% and the Nasdaq plunged 78%. They lost about 6% gross of fees during the 2008-2009 recession, but that performance outpaced the S&P’s 57% decline over the same period.
“Despite the fun and excitement of participating in the current Mardi Gras stock market bubble Completely independent of stock market fundamentals, suppose an investor could miss most of a 49% or 57% drop in the S&P 500, then return to the stock market when major economic indicators and long moving averages term indicate that the recession is over,” Dietrich said.
He pointed out that the “extremely overvalued” S&P index would need to fall 8% to return to its 200-day moving average, and that the index has declined an average of 36% during past recessions.
So, Dietrich said the benchmark index could suffer a 44% rout to around 2,800 points – a level it last reached at the height of the pandemic in 2020.
Dietrich also explained why he still expects a slight recession this year. He highlighted the sky-high stock market valuations, the charts flashing reda historic leap in what we call Buffett Indicatorthe risk that interest rates will remain high for longer and gold prices reach record levels as signs that the market and economy are headed for trouble.
The Wall Street veteran added that the recession was delayed by large quantities public spending, consumers accumulate debt make purchases, and a historically tight job market that is showing signs of cracking.
by Dietrich final warnings warrant skepticism, as the stock market and economy have challenged his ideas and those of other prophets of doom. gloomy predictions for years now.
Additionally, famous investors like Warren Buffett have warned against trying to time the market because it’s virtually impossible, and investing regularly or “spread of costs in dollars” in an index fund is a far superior strategy.
Yet several of Wall Street’s biggest players, including the CEO of JPMorgan, Jamie DimonDavid Solomon, CEO of Goldman Sachs, and Jane Fraser, CEO of Citigroup, all warned that the markets do not integrate risks…
