Market Crash! Not until everyone is involved. I still believe market will continue to melt up first before the historic crash.
A fresh survey from the American Association of Individual Investors says the biggest chunk of change was allocated to equities in March since June 2007, up 0.3 percentage point in March to 67.2%. That’s the third biggest allocation to equities since July 2007, trailing only two other instances — 68.1% in September 2007 and 68.3% in December 2013. Bond and bond fund allocation fell 0.5 percentage point to 15.7%.
Saxo Bank’s chief economist Steen Jakobsen says equities, unlike other asset classes, haven’t had a proper correction since the first round of quantitative easing began back in 2008.
“The first phase [of the correction] was commodities, which rose, then fell back. The second phase was fixed income, which rose then fell back again…now we come to equities. Since QE was launched, equities have kept rising,” he says. “For this saga to play out fully, I think we need it to go into equities. That will happen on a lack of earnings growth.
Statistically speaking, he says markets have had a correction of 10% almost every year, and 25% to 30% every five years. “And the world came into this year extremely optimistic about future growth,” he says.
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