Is 2018 the year for a Global Financial Crash?

Is 2018 the year for a Global Financial Crash?

Looking at the ‘crystal ball’ for the last three weeks there are definitely an increase in speculation. My cheeky definition of ‘crystal ball’ is Google. My feed on FB, Quora and Google Now and Seeking Alpha are simply filled with expertise speculation about the financial crash just around the corner. Sometimes I feel that these experts are trying to fill their time since BitCoins and Crypto are not a hot topic after the decline early January 2018. List of news:-

  1. Brink of crash!
  2. Kiwi Warning
  3. Davos 2018
  4. 2018 Financial Crisis
  5. Bitcoin trigger

The list goes on….

The main concern about the next financial crisis is simply the fact that the Banks and financial institutions have just recovered from the last 2007-08 crash. In fact money invested in Banks in 2007 had only recently recovered and some may have not. Most major government are slowly increasing their interest rates to boost their reserves for rainy days. Some experts feel that some countries may not have enough cash cushion if it happens this year.

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I have written about how to survive a financial crash last year. Looking in 2018, I am fairly comfortable as I have diversified my portfolio. Grab profits from my riskier and growth investment and now I have more than 20% cash sitting in my portfolio. I am hoping to double the cash savings this year. Now I will only invest in stocks and shares which are under their intrinsic value. Basically, I am not going to pay for overpriced stocks.

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Not concern about missing out on an excellent bull market because I aggressively bought good quality stocks at reasonable price in 2017 and most of them are more than 20% profits (minimum). With that I have some good cushion for a fall.

US value stocks are really hard to find. I am not keen on GE at all. UK stocks are still in Brexit Blues and I cannot put more money into defensive stocks or my portfolio will go out of balance.

I am keen on emerging markets such as China, India, Vietnam and Indonesia. Not easy to invest in these stocks (current broker limitation) but plenty of funds and ETF to support.

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So will 2018 be the year of the financial crash? Honestly, I do not think it will happen. The US market is long for a good correction but not a crash as they are in a good growth state. With President Trump new tax rules welcoming oversea funds into the country at a one-off tax, it will most likely grow the economy and inject more cash in. The Chinese are exposed to the global stock market with the record amount of IPO’s launch in 2017. The country is still growing at 6-7% yearly. Even with the crisis back in 2015 the population were cash rich enough to spend money on travel, luxury goods, property overseas, etc. UK and Europe may be more expose to a next financial crisis as they are still recovering slowly from all political hurdles in the last three years. Personally I am not keen on EU stocks because of the ageing economy and slowing down in their industrial technology.

In conclusion:-

  • No, to a dramatic financial crash in 2018

  • Yes, to a US economy correction which will ripple everywhere

  • Financial Crash or major correction will be welcome as my cash is ready for purchase of good quality stocks at discounted price.

 

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