Arturo Bris is a Professor of Finance who teaches Advanced Strategic Management and Strategic Finance at IMD, a top ranked Swiss business school. Previously, he taught at Yale.
So you could say that he might know what he’s talking about when he predicts that the next global financial crisis will hit in April 2015 – only a mere 9 months away – and that the crisis will last for a whole year!
Professor Bris believes there are 8 possible scenarios as to why there will be another meltdown:
A stock market bubble: “In the past year, stock markets have performed unrealistically well and at some point the situation will explode.”
Banking in China: “A severe crisis could be driven by growing Chinese shadow banking.”
Energy crisis: “If the US (the world’s largest producer of gas) begins exporting to the rest of the world, Russia might feel threatened, causing a geopolitical storm.”
Another real estate bubble: “There is a risk of a property bubble forming in countries like Brazil, China, Canada or Germany.”
Ratings and bankruptcy crisis: “Companies currently have too much debt and the new norm is to have a BBB rating.”
War and conflict: “There is increasing geopolitical tension. Events like the current crisis in Crimea could trigger a market crash, even if there is no war.”
Increasing poverty: “Overall world poverty has increased and whenever the poor become poorer, we can expect a social conflict.”
Cash and hyperinflation: “The surplus of cash that central banks and corporations are holding could end up damaging the economy.”
(More info here)
So what’s an Investor to do?
As someone who wasn’t an investor back in 2008, I have no idea how I will react to prices tumbling and all hell breaking loose. I would hope that I stay calm, develop nerves of steel and be able to sit tight…though I’ll probably sweat a little lot!
So, my strategy (if you can call it that) is to continue doing what I’m doing now, ie monthly investing into a mixture of equity funds, bond funds and putting aside some cash.
Hopefully I shall see any crash as ‘opportunity’, though this will probably be easier said than done!
So…9 months to go…. I’m betting there’ll be no baby shower for this ‘Apocalypse Baby‘!
I’ll start a countdown til the waters break like a tsunami…
Hi weenie. I reckon the best strategy is still gin and tonic (only more of it ) 🙂
Hi Cerridwen, I'll drink to that! Make mine a double! 🙂
Just found this blog and I really like it.
When I see an article like this I want to say Yale? Schmale.
Q: So what's an Investor to do?
A: Ignore forecasters, academic soothsayers and false prophets…focus on what you can control and dont worry about what you cant. Carry on doing the stuff you already know works and this blog covers…live frugally, save, invest etc.
Hi TEA, I'm aiming to ignore the doomsayers but I know it's going to be hard. Yes, I shall keep on doing what I'm doing and hope to improve! Thanks for stopping by!
Hi Weenie,
We're very likely to come up against another crash at some point. As we will come across another market boom. If we look back over the years the stock market is full of both. We just don't know when or how many….
We only lose money when we sell. I don't plan on selling any of my shares for 10-40 years. I might experience a couple of booms or busts during this time, but I believe the value will be worth much more in 20-30 years time than it does now.
Cerridwen has a nice suggestion to pass the time too!
Stay strong!
Huw
Hi Huw, yes, buy and hold is my intended strategy. Whilst I switched/sold some funds recently, they were to redress my passive/actively managed funds issue and none were sold at a loss.
Boom or bust! It's going to be rather scary but I'm on this rollercoaster and not about to get off!
A stiff gin as suggested by Cerridwen won't go amiss, lol!