What will be the signals that the market is going to crash?

Are we in a cash storm? How about a stock market bubble waiting to burst? How will we know when this joy ride is over?

First off, I’m not a financial advisor and not offering it. The following are just some thoughts on the market as a whole given recent situations. Whether it’s the Reddit memes or Robinhood shenanigans many stocks had CRAZY growth rates in 2020. It’s not normal for dozens of companies across various sectors to post 100-300% gains or higher in a single year, yet we saw Square rise from $80 to $272, Tesla from an adjusted price of $171 to $816, Nvidia from $296 to $598. Anyone who was contributing to a 401k, IRA, or S&P 500 Brokerage account more than likely had amazing, if not great, growth last year. This was all before the January short squeeze where many people made and lost significant amounts of money with meme stocks.

But when does this wild ride end? When do people who have been out of work and are now making YouTube videos about how they made money selling puts or buying calls get sucked into the black hole of a crash?

I wish I had a crystal ball, but here are my thoughts.

10 Market Signals I think could lead to a crash in 2022.

1. Dr. Fauci says we don’t need to wear masks.
   • With no need for social distance and every type of business able to reopen people who have been hoarding their wealth and investing it will now be able to go spend that money on other things. Instead of buying more Apple or Tesla stock, they’ll go on vacation or out to eat at a fancy restaurant.
2. The unemployment rate drops significantly.
   • Before the pandemic, the US had an unemployment rate of 3.36% in January 2020. This has since shot up to 8% in December 2020. Once more people are going back to work and the unemployment drops down to about 6% or 5% the next signals begin.
3. The US Government will stop stimulus payouts.
   • With people working again and unemployment low there will not be a need for the government to keep stimulus payouts going. This “free” money those who were working received and banked into their investments will no longer have excess money for speculative investing. They’ll be forced back to sticking with what their work budget has allowed them historically to live off of.
4. The Feds raise interest rates.
   • Directly after unemployment rates drop and the stimulus payouts end the Federal Reserve will once again raise interest rates. They’ll go from the 2% they are now back to the typical 4-6% they had been prior.
5. Moratorium on Evictions and Foreclosures lifted.
   • Yeah, this is going to suck. In the US many folks who have been out of work are living in their homes or renting places they haven’t been able to afford. There has been a stop measure where Banks are not allowed to foreclose and landlords could not force an eviction. When the above happens, you can bet this safety net goes away and even though I am sure there will be a grace period, many American’s won’t be able to catch up. Banks will foreclose. Landlords will evict.
   • This causes two things to happen. Many people will exodus out of expensive areas and downgrade to more affordable areas. As the exodus from places like San Francisco, Los Angeles, and other cities happen the rents will drop as will the value of the houses in those areas.
6. Food banks closed.
   • With most American’s working, no stimulus, etc. there is little need for Food Banks and these resources will dry up.
7. SPACs become unsuccessful in raising capital.
   • Ah yes…SPACs…the idea that you create a company on paper, which literally does not a single thing, then raise a ton of investor capital for the sole purpose of that business entity merging with a company that wants to do a thing so it can go public and raise more money to try to do the thing it thinks it can…Yeah this shit is going to crash hard. Maybe not this year or next but this shit is dumb and everyone knows it. It’s about as good an idea as the 80/20 home loans taking place before the real estate crash in 2007.
8. Business bankruptcies on the rise.
   • With free money gone, we’ll see the penny stock companies that people have been throwing stimulus money into go belly up.
9. BTC loses 50% or more of value.
   • I’m a fan of Bitcoin, and digital currencies in general. But it’s a hedge against a week dollar and that’s one of the reasons it’s been growing so quickly. The more companies that use this hedge, the more companies will rely on this when the money runs out and they need to sell off these assets for cash to keep their company going. The selloff, when it happens, will be what causes this to drop.
10. Amazon, Google, Apple, Microsoft, and Tesla lose 30% of their value.
    • With interest rates on the rise, an increase in taxes and regulations due to democratic policies, and the end of retail speculative investments driving up meme stock prices we’ll finally see the crash everyone knows is coming. Will it be the end of the world? No. Will it last forever? Doubtful. But I’d be silly to assume that the market won’t have a massive “correction” of around 30% or more with some of its biggest winners.

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