MarketWatch: A Recession Shock Could Wipe 30% Off US Stocks, Warns Oxford EconomicsPaul-Martin Foss
But they’ve got a couple of grim worst-case scenarios. One envisages the US economy slowing sharply from the third quarter of this year, then falling into recession as corporate profits [fall], hitting business and investor sentiment. The fallout from this could trigger a 30% drop in the S&P 500 in the third quarter. Within a year the US would be in recession, with the Fed cutting interest rates aggressively to “stave off the worst of the shock,” say the economic forecasters.
A 30% fall in stocks isn’t even a worst case scenario. We saw most stock markets fall over 50% during the 2008 crisis, and this bubble is even bigger than the housing bubble. Don’t be surprised to see investors lose even more this time around, on the order of 75% or more in a worst case scenario. Timing is the critical issue, as anything occurring in the third quarter doesn’t leave investors all that much time to protect their retirement savings.