If you think today’s broad market sell-off was a disaster, just wait until September 2008. That’s when, according to the Royal Bank of Scotland is saying the S&P 500 could fall more than 300 points to about 1,050.
"A very nasty period is soon to be upon us – be prepared," wrote the bank who also said the inflationary threat will "paralyze major central banks."
"The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets."
And it could get worse, says Morgan Stanley.
"It will be worse yet – for Europe – if the Fed backs away from expected tightening. ‘This could trigger another ‘catastrophic’ event.’"
"We see striking similarities between the transatlantic tensions that built up in the early 1990s and those that are accumulating again today. The outcome of the 1992 deadlock was a major currency crisis and a recession in Europe," said a report by Morgan Stanley’s European experts.
So, as an investor, what do you do? One, keep some investment in cash, or two, profit from the insanity with UltraShort positions, short positions, and put options.
My readers profited handsomely from the subprime, Alt-A, credit fiasco, the downfall of the UK economy, and banking disasters in 2007 and 2008.
And it won’t be a problem profiting when the next disaster hits.