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Investment Legend Warns of a 1987-Type Market Crash

Stock-Markets / Financial Crash Jul 30, 2017 - 02:06 PM GMT

By: Graham_Summers

Stock-Markets

Klarman is founder of Baupost Group and is widely considered to be one of the greatest value investors in history. In 30+ years from 1982 to 2015, he only had three losing years, and is believed to have averaged returns of 16%.

Bear in mind, he did thiswhile keeping 30%-50% in cash at all times.


Put simply, Klarmen’s returns on invested capital are simply astonishing. To be able to churn out those types of returns while being that risk-averse borders on the impossible.

Which is why when Seth Klarmen and his team warns of a potential Crash, you need to listen.

On that note, Klarmen’s top advisor for publicly traded investments recently noted precisely what we’ve been warning about for weeks: that automated trading in risk-parity funds is going to cause a potential 1987-type Crash.

In the Baupost Q2 Letter, Mooney estimates that investments linked to volatility “likely runs in the hundreds of billions of dollars,” a fact that could propel a market crash once the snowball starts running down the hill. “Any spike in equity markets realized volatility, even to historical average levels, has the potential to drive a significant amount of equity selling (much of it automated),” which would create a self-fulfilling feedback loop that only builds upon itself.

Source: ValueWalk

We’ve been noting for weeks that the markets are being rigged by risk-parity funds. All told these funds manage some $500 billion in assets. And they are mindlessly buying stocks based on automated triggers, NOT sound judgment.

This works great when the market is rallying. But what happens when those same automated systems get hit with “sell orders” and some $500 billion in capital (the real amount is even larger as many of these funds are leveraged) hits “SELL”?

The markets had a similar experience with automated trading programs in 1987. It wasn’t pretty.

A Crash is coming…

And smart investors will use it to make literal fortunes.

We offer a FREE investment report outlining when the market will collapse as well as what investments will pay out massive returns to investors when this happens. It’s called Stock Market Crash Survival Guide.

Today is the last day this report is available to the general public.

To pick up one of the last remaining copies…

CLICK HERE!

Graham Summers

Phoenix Capital Research

http://www.phoenixcapitalmarketing.com

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

© 2017 Copyright Graham Summers - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Graham Summers Archive

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