Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Monday, 14 April 2014

Faber: "Worse stock market crash than 1987 is coming"

Usually stock market predictions are a waste of time, but here's one of the more interesting ones from Swiss investor Marc Faber.

Business Day reports:

"Dr Faber is predicting a 1987-type stock market crash this year – only it will be worse. He told CNBC that the pain in the internet and biotechnology sectors was just getting started, and the market was beginning to realise that US Federal Reserve was a "clueless organisation".

"I think it's very likely that we're seeing, in the next 12 months, an '87-type of crash," Dr Faber told CNBC. "And I suspect it will be even worse."

Dr Faber's prediction comes after another high profile investor, Jeremy Grantham, said last month the ''next bust will be unlike any other''. The US technology-heavy Nasdaq plummeted by 3.1 per cent on Thursday night (US time), its biggest one-day drop since November 2011.

"I think there are some groups of stocks that are highly vulnerable because they're in cuckoo land in terms of valuations," Dr Faber said. "They have no earnings. They're valued at price-to-sales. And this is not a good metric in the long run."

There is no argument with the over-valuation of tech stocks, with the NASDAQ have climbed the wall of worry all the way up to a vertigo-inducing 35 times earnings.

As for whether the Dow Jones (which has been trading at a rather more realistic average valuation despite a bonanza run over the past half decade) sees a 1987 style crash in the next 12 months, only time will tell. 

For the record in 1987 stock markets around the world unwound with Dow Jones crashing by by 508 points in 22.6% in one day (aka. "Black Monday").

There has been plenty of debate as to whether that particular crash was exacerbated by automated trades and computerised stop orders being activated.

In any event, note that the crash took the index down from 2,722 to 1,738.

Today, despite a 400 point pullback, the index sits at above 16,000, a good indication of why rational long-term investors often see stock market crashes as buying opportunities.