Rachel’s note: Many readers are concerned whether we’re on the cusp of a market crash.
That’s because January marked the worst stock market plunge since March 2020.
But Jeff Brown, technology expert and Casey Research friend, believes this won’t last long… and that the market is simply overreacting to signals from the Federal Reserve.
And luckily, Jeff has put together a special briefing to walk you through the current situation.
So if you’re worried about whether you should buy, sell, or hold… sign up for Jeff’s event here. It’s taking place on Wednesday, February 16 at 8 p.m. ET, and it’s free to attend.
For more details about what’s going on in the markets, read on…
By Jeff Brown, editor, The Bleeding Edge
This January marked the worst stock market plunge since the March 2020 crash.
Technology stocks were particularly hard-hit. The tech-heavy Nasdaq Composite dropped 10% in a month.
And the SPDR S&P Biotech ETF (XBI) saw an even bigger drop, falling 20% to start the year. Even the cryptocurrency market cap sank roughly $500 billion during January’s selling.
Obviously, this is deeply concerning… The red we’ve been seeing has hit all of our portfolios, including mine.
Many readers are concerned whether we’re on the cusp of a market crash.
So today, let me explain what I see going on in the markets… and share my blueprint for handling this volatility…
The market is overreacting to the signals coming from the Federal Reserve. The Fed is implying it will raise the Fed Funds rate several times in 2022.
It’s said it could raise rates three or more times throughout the year… and will reduce the assets it’s buying as well.
That’s been causing a lot of concern in the marketplace.
As I mentioned above, the technology sector is down. And while this has been a broad market decline, the plunge hit tech harder than the S&P 500… since that’s where we’ve seen some inflated valuations.
And all this volatility is bringing some of those inflated valuations back down to earth.
I’ve warned readers several times about the lofty valuations of companies like Snowflake (SNOW) and Zoom Video Communications (ZM).
When companies trade at 80–100 times sales, then those ridiculous valuations need a correction.
The Fear Is Overblown
We do have real inflation right now, but there’s one big reason why I think the Fed won’t act on all its talk about rate hikes.
We don’t have the desire or the willingness to raise interest rates that significantly given the November midterms coming up.
I believe a 25-basis point increase will occur in March. Beyond that, I’m very skeptical. We may see one rate increase after that, perhaps in Q2.
But during the second half of the year, I just don’t see the Fed touching rates. It’s too dangerous, and they won’t risk impacting the markets in that way.
Already people are struggling with the cost increases of just about anything we purchase. Having the markets, the value of our savings, and the value of our stock portfolio decline at the same time is just unacceptable.
But we will see a secondary effect… With declining asset prices, I do expect to see the labor market return to a much healthier state.
We had record levels of resignations in 2020 because the value of people’s homes, stock portfolios, and cryptocurrency portfolios were high.
People felt like they had cushion and could live without needing to work.
As asset prices decline, we’re actually going to see a shift back into the workforce. I expect the labor force participation rate to increase in the coming months.
We have to remember that we have a very strong economic environment, despite the chaos we’re seeing in the markets.
Where Do We Go From Here?
I want all my readers to know my team and I are watching the markets very closely. We’re looking for great investment opportunities as fantastic assets and companies come back down to realistic valuations.
Ultimately, I believe interest rates will stay below 1% in 2022. And that means money will continue to flow into the equity markets.
And in the meantime, we’re still on the lookout to help readers through the current turmoil… After all, many investors are worried… and are wondering exactly how to play this situation.
Should we buy? Should we sell? Or should we hold?
The good news is, I’ve put together an exclusive briefing to cover this very topic.
On February 16, at 8 p.m. ET, I’ll share not only on the best way to play the markets… but also what I’m doing with my personal money right now. And I’ll also be unveiling the name and ticker of one of my top stocks for an easy double this year.
If you haven’t already, please put February 16 on your calendar.
And then simply go right here in order to RSVP for this event. I promise it will be worth your time to tune in.
I’ll look forward to seeing you there.
Editor, The Bleeding Edge
Casey Research Is Hiring… Could You Be the One for the Job?
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The outcome: potentially partner with the Casey Research team to help lead our EV research efforts.
Immerse yourself in everything related to electric vehicles
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About Legacy Research Group
From the beginning, independence has been the key to our success. Unlike the mainstream press, we don’t make our money from corporate advertisers. And unlike Wall Street, we don’t take commissions or fees from the companies we cover in our newsletters.
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