Tags: Dan Niles | Investors | Market | Plunge

Dan Niles: Investors Must Brace for 20 Percent Market Plunge


By    |   Wednesday, 17 May 2017 10:33 AM

Investing expert Dan Niles warns that savvy investors should prepare for a 10 percent to 20 percent stock market tumble because such a correction is long overdue.

“Investors need to be aware that, at these multiples and the age of the current bull market, that the next likely move of 10 percent to 20 percent in stocks maybe lower, not higher. The problem is, most of the time that crystal ball is not handy and you do not know exactly when the next market wildfire is coming,” Niles, founding partner of AlphaOne Capital Partners and senior portfolio manager of the AlphaOne Satori Fund, wrote for CNBC.com.

"Much like the New England Patriots coming back from a 28-3 deficit to win the Super Bowl, anything is possible," he wrote.

“In good times, it is easy to get caught up in trying to obtain everything. In bad times you realize you do not want to lose everything. Only time will tell how long this bull market can last but I can guarantee, you will want insurance when it ends," he wrote.

"With Central Bank rates today near all-time lows and their aggregate balance sheets at all-time highs, governments won't be able to be the insurance policy they once were in 2001 or 2008 once the current bull market ends and the next recession/correction begins,” he wrote.

“As stocks continue to climb, this 98-month-old bull market seems to have the legs of a youngster. This is the second oldest bull in history. How long did the oldest bull market last? It was from October 1990 through March 2000, a whopping 114 months. Unfortunately, that ended with a 49-percent correction over roughly 2 ½ years. During the most recent full economic cycle that started in October 2002, the bull market lasted 60 months but in the span of 17 additional months, the market lost 57 percent during the correction,” he wrote.

On Wall Street, U.S. stocks were sharply lower on Wednesday after reports of a leaked memo by former FBI chief James Comey caused alarm on Capitol Hill, raising questions about whether President Donald Trump tried to interfere with a federal investigation, Reuters reported.

Trump asked Comey to end a probe into former National Security Adviser Michael Flynn's ties with Russia, according to the reports.

The latest development could distract Trump from pursuing his proposed policies such as tax cuts and simpler bank regulations, which have underpinned a record-setting rally on Wall Street.

The news comes on the heels of a tumultuous week at the White House when Trump unexpectedly fired Comey and then disclosed classified information to Russia's foreign minister about a planned Islamic State operation.

Newsmax Finance Insider Andrew Packer warns savvy investors not to be scared away when political fears rattle the stock markets.

"Mr. Market pays some attention to the political headlines," Packer wrote in his exclusive Newsmax Finance commentary.

"But he quickly sorts through the investment implications. And if it looks like the world is going to end politically, so what? As long as earnings are good, Mr. Market tends to shake off even the worst events. That said, because political events tend to flare up, tank markets, then die off quickly, it’s often a great short-term buying opportunity for stocks," Packer wrote.

"That’s been the case with other geopolitical events as well. Even after the 9/11 attacks, the last time the market exchanges briefly closed, stocks came roaring back to pre-crisis highs within 90 days. Indeed, the bigger uncertainties right now aren’t political in nature, they’re financial," Packer wrote.

(Newsmax wires services contributed to this report).

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Investing expert Dan Niles warns that savvy investors should prepare for a 10 percent to 20 percent stock market tumble because such a correction is long overdue.
Dan Niles, Investors, Market, Plunge
Wednesday, 17 May 2017 10:33 AM
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