Will Tech Crash Lead to Stock Market Crash: Independent Financial Advice
Drop in demand for wireless means tech stock crash is coming
Tech stocks may go down as wireless demand has peaked. Bloomberg has an article showing wireless demand is contracting. This would make Apple’s stock go down and since Apple has had a huge influence in increasing the performance of the SP and Nasdaq then when Apple goes down it will trigger a wave of automated hair trigger selling by over-leveraged hedge funds. This situation, when coupled with an increasing awareness by the public of the need to do tax-related selling before year end will trigger a stock market rout. This will make bond prices go up.
I’m a Los Altos fee based financial planning advisor. People ask me questions such as which one is riskier bonds or stocks? They ask “will a Romney victory hurt stocks or bonds?” Is there a black swan coming?
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My opinion is that there is the risk of a Black Swan crash like the March, 2009 crash where the SP went down roughly 50% to 666 and we will retest those lows. I believe the Fed has engineered a bubble and inflated the stock market above its intrinsic value. Ultimately markets are more powerful than a deceptive government printing press, so a perpetual supply of easy money from the Fed will not always succeed in propping up the stock market. At some point new QE programs will lose credibility, no one will believe in them and the Fed’s easy money will stop inflating the stock market and then stocks will crash. This will make bonds go up in value, even if the Fed stops buying bonds and even if the Fed stops “Operation Twist”.
I wrote an article “Recession to come in 2012 not 2013”.
Investors should seek independent financial advice.