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#395
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Original Transcript
It's the $64 trillion question. Will there be a stock market crash soon? If you're worried about it, know this. The best approach is to build a sturdy financial foundation and accept that crashes are going to happen sometimes. But here's what some smart financial thinkers think about the likelihood of an upcoming crash. Now, a long-running survey by Yale University economist Robert Schiller shows that respondents expect about a 30% chance of a crash in any given year. How do you define a crash? Well, it's a drop of 30% or more in the SFV 500 index. Now, the numbers say differently. For example, Stephen Blitz, who's the chief US economist at TS LongBard, looked at some options math. They say that the odds are between 8% and 10% in any given year. Or that crashes happen every 10 to every 12.5 years, which is about right. But now crashes don't go on a schedule. The last one was six years ago when COVID crashed to the US economy, which doesn't mean they were free and clear because sometimes they come back to back. Blitz says that conditions are actually ripe for more frequent crashes during a time when the Missouri index, which is a combination of inflation and unemployment, is rising as it happens to be today. At to that, the fact that stocks have almost never been as expensive as they are today and the odds of a crash are a bit higher than usual. Worried? Well, just remember this bit of wisdom from Starfund Manager Peter Lynch. Far more money has been lost by investors trying to time the market than in market declines themselves.