Monday , 17 June 2024

Watch Out! These Global Crises Could Potentially Derail Your Portfolio

5 Economic Crises That Could Derail Your Portfolio

The odds of returning [to] the gloom-and-doom scenario of 2008 is quite unlikely but [I have identified several events which could occur and derail your portfolio unless they are closely monitored. Here they are.] Words: 674

So says David Sterman (  in excerpts from an article* which Lorimer Wilson, editor of  (It’s all about Money!), has further edited ([  ]), abridged (…) and reformatted below  for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.  Sterman goes on to say:

5 Potential Global Economic Crises

[How the following five potential] global obstacles… play out will determine whether stocks rise or fall in the next year or two [and, as such, bear being] closely monitored in [the] coming months.

  1. Unemployment trends:
    The monthly jobs report, which is released on the first Friday of every month, is the single most important economic indicator for you to be tracking in the months ahead. The U.S. economy needs to create 200,000 jobs every month just to keep the unemployment rate steady.[The] trouble is, [however, that] state and local governments are cutting jobs and the federal government is expected to start cutting jobs soon as well. These cuts will certainly blunt the gains made from the private sector, which are expected to be modest at best, anyway. If employment trends start to get worse again, as they did with the May jobs report, then investors will face a whole host of new concerns — from falling consumer spending to further deteriorating government finances, to even more woes in the housing market.
  2. Budget woes:
    Washington’s… inability to address its staggering addiction to debt has led many to expect rough seas ahead for stocks…Similar debt problems in Europe and Japan can de-rail the global economy – and U.S. stocks [as well]. The markets are so intertwined these days that an economic meltdown in any of these regions would quickly spread.
  3. The China factor
    The Chinese economy is a massive export machine but it has also become a magnet for imports, benefiting everyone from U.S. farmers to European auto makers. That’s why signs that the Chinese economy may be starting to cool has many economists worried. Among China’s potential problems: rising inflation, a real estate bubble and social unrest, just to name a few. If the Chinese economy encountered any serious hiccups, then the global economy would surely feel the impact.
  4.  Hurricane season
    A recent spike in tornado activity, coupled with unusually warm water in the Caribbean, has led forecasters to predict [that] hurricanes may again wreak havoc in August and September, the peak of the hurricane season. The [negative] economic impact on [those regions affected]… has put a serious dent in stocks in the past, and would likely do the same again.
  5. Saudi Arabia
    Saudi Arabia is the single most important economy for U.S. investors as it almost single-handedly determines oil prices with its massive output. In a worst-case scenario, social unrest in neighboring countries could spread to Saudi Arabia, threatening the country’s rulers. That might push oil to $150 a barrel — or higher — which would quickly push the U.S. economy into recession.

 The Good News:

If the [above five] issues fail to materialize then the Dow Jones Industrial Average at 15,000 could be a real possibility in a year or two. There are many positives in place, most notably a very healthy corporate sector and reasonable values to be had in the stock market. [However,] if these concerns do morph into real problems, then a Dow of 10,000 is also a real possibility.

By closely monitoring these five potential problem areas… any sudden shifts in the Dow should come as no…surprise to your portfolio.


Editor’s Note:

  • The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
  • Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.

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