Are you worried that a big stock market crash is coming?
If so, you’re note alone. In fact, more than half of America is with you…
According to a new survey from Allianz Life, 54% of U.S. investors are worried that a big market crash is on the horizon, and more than two-thirds of the 1,005 respondents in that survey said that they are hoarding cash to protect their wealth against such a crash.
Meanwhile, according to the American Association of Individual Investors’ weekly sentiment survey, the percent of market participants who are bullish on the stock market has dropped to the 20% to 25% range over the past few weeks – marking the lowest levels in over a year.
Why the sudden bout of bearishness? After all, wasn’t everyone commenting on how strong the stock market was just a few weeks back?
Well, you can chalk up Wall Street’s mood swing to the bond market.
Long story short, ever since March 2021, the bond market has been driving the stock market.
That’s because, ever since then, inflation has been red-hot, the economic recovery has been uneven, and the path forward for Fed policy has lacked visibility. The sum of these dynamics has caused unusually large volatility in a normally quiet bond market, which has in turn driven sharp swings in the stock market.
The general fear is that inflation will stay hot, the recovery will stay uneven, and the Fed will stay unpredictable – thereby ending what has essentially been a 40-year bull market in bonds and causing a big stock market crash in the process.
But that isn’t going to happen.
Soon enough, today’s enormous headline inflation numbers will come down, once supply chains are restored throughout the globe and pent-up consumer demand from being in “lockdown” is exhausted.
Also soon enough, the global economy will recover most of its Covid-induced losses, and economic expansion will stabilize at a more normal and even level. In response, Fed policy will be more certain, and there won’t be big question marks month-to-month with respect to what the Fed is going to do next.
The stock market won’t be waiting on pins and needles.
In other words, it’s only a matter of time before inflation cools, economic growth stabilizes, and Fed policy finds its footing. When those things happen, the bond market will calm down, and the stock market will power higher.
So… forget all this talk of a big stock market crash.
Will trading likely remain volatile over the next few months? Absolutely. Because, over that stretch, inflation is going to stay hot, growth is going to remain uneven, and the Fed is going to taper. Against that backdrop, stocks will be volatile.
But will a big crash materialize? No – and in time, this volatile trading will end with a big surge in stocks as the bond market calms down.
We suspect that will happen in 2022.
Once that does happen, the focus for stocks will return to where the focus should be: On business fundamentals and earnings growth prospects.
When that day comes – again, likely in 2022 – a certain group of stocks will benefit in an immense way: Hypergrowth technology stocks.
That’s because the business fundamentals and earnings growth prospects underlying hypergrowth technology companies have continued to strengthen dramatically over the past several months.
EV sales have surged. Solar installations have boomed. Digital advertising spend has ballooned. Cloud computing has become ubiquitous. Space exploration is getting democratized.
Yet, their stock prices have struggled for gains in 2021 amid bond market volatility.
When that volatility settles in 2022, you’re talking about a set-up wherein hypergrowth stocks could surge as strong fundamentals converge on discounted prices.
The investment implication? It’s time to play the contrarian, forget about a market crash, and buy hypergrowth technology stocks.
That’s exactly what we’re doing in our flagship investment research advisory, Innovation Investor.
We’re hyper-focusing our energy and efforts on identifying the best hypergrowth technology stocks to buy now, on a big dip, before they soar in 2022 – and score you potentially 10X gains in the long run.
We truly believe that now represents a generational opportunity to buy tomorrow’s biggest companies, at today’s biggest discounts.
All you have to do to score big gains is act. Don’t hide. Don’t hoard cash. Don’t follow the crowd. Instead, invest in the future.
Ready to join us? Click here to find out more.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.