Market Corrections Could Begin In Q3 of 2021
A lot of the economic data focuses on quarter-over-quarter data…
How did Q2 of this year, compare to Q2 of last year? What is construction spending today, compared to the same time a year ago? Or how is CPI behaving today compared to a year ago? Things like this.
Lyn Alden's base case for Q3 centers around year-over-year numbers.
If you look at base effects, Q1 was mostly before the pandemic. Quarter 2 was absolutely the worse part of the pandemic, and Q3 was a bounce up from the pandemic.
So when you do these year-over-year comparisons, Q2 of this year is going to look fantastic to Q2 of last year, because the pandemic was at its worse in Q2 of 2020.
To put things into context, the price of oil went negative in Q2 of 2020.
What happens In Q3 2021?
Fiscal Gridlock is a real possibility
But when you get to Q3 some of the economic data will be less intense. Lyn believes we might start seeing fiscal gridlock.
We've had multiple rounds of fiscal stimulus, and politicians might introduce friction into more stimmy check spending.
There are infrastructure proposals…maybe they don't pass infrastructure?
As fiscal policy continues to heat up the political sphere, assume more tail-risks coming from politics…Anything can happen.
Assets are in a bubble
Market participants have bid up assets so high, that we continue to inch closer and closer to a metaphorical Wiley Coyote cliff scenario. We are overdue for a market correction. Can the Fed keep it together indefinitely? Probably not.
Chris MacIntosh Sells All His Bitcoin
Despite Lyn's bullish case for Bitcoin, and other assets. Glenorchy Capitalist money manager, Chris MacIntosh sees Bitcoin in a bubble.
A good money manager practices sound risk management, so Chris felt it time to cash in his Bitcoin (been holding since 2014), take the monster gains, and take that risk off the table for his clients.
Chris is a firm believer in blockchain but sees the speculative mania for what it is.
He feels that there are too many 10x opportunities out there waiting to be scooped up. The chances of bitcoin moving from a $1 trillion dollar market cap to a $5 trillion market cap will be more difficult this time around. So why risk it?
Chris is usually early to the party, and Q3 could very well prove him correct if crypto starts correcting.
We still have a little more runway
Despite changes in the market, Lyn feels there's still some runway left. But now is the time to get more tactical when considering the risks moving into Q3. She's looking at her positions and what may need to be trimmed back.
Rebel Capitalist Pro members can expect more guidance from Lyn as we inch towards Q3.
What Stocks To Own If There's A Stock Market Crash
If you are a Rebel Capitalist Pro member, then you know we don't time markets and we are 3 – 5 year holders.
However, that doesn't mean we should whistle past the graveyard. Remember when George lost his TD Ameritrade password?
If you got into some commodity trades early or cheap shippers…then riding out a correction might not be a bad idea…However, if not, then best to pay closer attention.
Investors who follow Lyn Alden, George Gammon, and Chris MacIntosh know that the best way to make money over the long run is to learn how to buy high-quality, deep-value, stocks in sectors poised for monster growth.
Nothing is immune to a massive correction, like March 2020. However, the high-quality stocks that Lyn and Chris invest in, tend to bounce back faster. Why?
They were cheap when purchased (buy cheap), and they were high-quality (well researched) and poised for growth (macro view indicates strong upside potential).
“People will still need their medicine”
In one of Lyn's latest premium reports (available to Rebel Capitalist Pro members), she has no problem recommending bluechip healthcare stocks to serve as a hedge for a possible fiscal cliff scenario in Q3.
Lyn Alden conducts a live Q&A every other Tuesday with Rebel Capitalist Pro members. She answers member questions and covers her premium newsletter, which members also get access to.
What do you think?
Are we getting long in the tooth, with respect to the pandemic and fiscal policy? Will we see a market correction. If so, how bad? Let us know in the comments.
Thanks for the timely guidance. Valuable insight is always welcome.
Why would you invest in any stock right now, even blue chip health stocks, if you’re expecting the market to crash? Why not sit on cash and buy everything cheap when the crash finally happens?
In times of milder inflation, that makes sense. But if you expect hyperinflation, you don’t want to be in cash, as its buying power is evaporating like cotton candy in a downpour. Play against the dollar for those unwilling to pay the premiums (&/or storage) on physical precious metals or other non-depreciating hard assets as a store-of-value strategy. Plus, dividends to counteract inflation. Just my UNeducated guesses. 🙂
Peace to All
While we have inflation now, we don’t yet have hyperinflation. If the expectation is a stock market decline of around 15% in Q3, inflation would have to be higher than that to make it worth the risk of staying in the market. The CPI is a lie but I doubt that real inflation is higher than 15%.
You’re not trying to time markets are you?
This isn’t an argument, it’s an admonishment.