Economic Collapse Blog
January 1, 2019
Now that the year is finally over, we can officially say that 2018 was the worst year for stocks in an entire decade.
Not since the last financial crisis have we had a year like this, and many believe that 2019 will be even worse. And of course the truth is that stocks are still tremendously overvalued. Stock valuation ratios always return to their long-term averages eventually, and if the Dow Jones Industrial Average plunged another 8,000 points from the current level that would begin to get us into that neighborhood. Unfortunately, the system is so highly leveraged that it will not be able to handle a price decline of that magnitude. The relatively modest drops that we have seen already have caused a tremendous amount of chaos on Wall Street, and a full-blown meltdown would quickly result in a nightmare scenario potentially even worse than what we experienced in 2008.
For investors that had become accustomed to large gains year after year, 2018 was a brutal wake up call. The following comes from Fox Business…
2018 may be remembered as the year the Grinch stole your retirement or stock investment account.
December was the worst month for the Dow Jones Industrial Average and the S&P 500 since 1931, as tracked by our partners at Dow Jones Market Data Group. The S&P 500, the broadest measure of stocks, lost 9 percent and the Dow over 8.5 percent.
For the year, stocks turned in the worst performance since 2008.
According to the bulls, this wasn’t supposed to happen. In the middle of the year, they were projecting that a “booming” U.S. economy would continue to drive stock prices higher, but instead we just witnessed the worst three month stretch for stocks since the 4th quarter of 2008, and the month of December was the most painful of all…
December was a particularly dreadful month: The S&P 500 was down…