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Second crash ?: Another 40 percent share crash by Corona? – Analyst sees parallels to 1929 | message


A. Gary Shilling expects second crash
40 percent crash?
Bonds preferred

The corona virus has already led to a historical crash on the stock markets, putting an end to the longest bull market in history. In the meantime, the panic has subsided and investors are now torn between the hope of a rapid economic recovery and the concern about rising infection numbers with corresponding negative consequences for the economy – or a new shutdown.

Parallels to the development of 1929

American financial analyst A. Gary Shilling is one of the most pessimistic about the future. In an interview with “MarketWatch” he made a comparison at the time of the Great Depression: “I think it will go down a second time and this is very reminiscent of what happened in 1930.”

As a reminder: When the New York stock market collapsed in October 1929, it was the prelude to the so-called Great Depression or Great Depression. At that time, stock prices fell over three weeks before moving sideways in November. As some investors now believed that the US leading Dow Jones index had bottomed out, they began buying stocks at what were supposed to be bargain prices. But then the prices fell again and the actual ground was only reached in the summer of 1932.

The global economic crisis was marked by numerous corporate breakdowns, mass unemployment, a lot of social misery and political crises. In the United States, the economy was only able to recover sustainably thanks to the economic and social reforms (New Deal) implemented by President Franklin D. Roosevelt in the years 1933 to 1938.

Even with the current crisis, A. Gary Shilling does not expect a rapid recovery and rather warns against looking forward too early: “The stocks behave very similarly to the rebound in 1929, while investors seem to be absolutely convinced that this Virus under control and that the huge monetary and fiscal stimulus will revitalize the economy. ” Shilling warns, however, that the stock market could collapse by 40 percent next year.

What to invest in

Given the risk of such enormous losses, the expert discourages equity exposure. His investment tip is therefore government bonds: “I think there will be a downward pressure on prices, which has a positive effect on government bonds, which I have preferred since 1981.”

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