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Is the crash imminent? Numerous crash prophets keep speaking out, prophesying economic doom. We want a fact-based look at the past and examine when crash predictions first appeared, who made them, and whether they ultimately came true or not. Have fun! Lately, I've personally noticed that crash prophets are back in vogue.
Yes, you hear crash predictions everywhere again, but this is actually not a new phenomenon. Quite the contrary. I'm going to show you that such nonsense predictions happen more often than you think, and not just for the last week or two, or even yesterday, but for many years, if not decades. And of course, an economy isn't perfect; of course, an economy always carries risks.
Yes, it's never been any different. But the question is, when someone presents themselves as an expert, especially in the media, and this person keeps talking about a different topic, it's only natural that we look at their track record. Yes, if we want to understand... Whether someone is competent or not and claims to make predictions, we naturally have to look at the validity of these experts' past predictions.
That's exactly what I want to do here, and you'll probably come across some names, especially well-known in the German investment world, and often quoted in the media. Whether rightly or wrongly, you'll have to decide for yourself. I'd like to show you the statement again and what happened afterward on the stock markets.
So, have fun! And you can see the price chart of the MSC World, which tracks over 1,600 companies from 23 industrial nations and runs very similarly to the DAX or the US stock index SNP. The blue dashed line always shows the point in time when this prediction was made. In February 2009, Roland Leuschel said that prices would plummet by 60 percent.
Also in February 2009, Dirk Müller, also known as Mr. DAX, has not only launched his own fund, but stocks and equity funds simply do n't belong in a portfolio during these uncertain times. Hedge fund manager Felix Zulauf also said in February 2009 that it was clearly too early; we are experiencing a turning point with major strategic upheavals, which is definitely not the point at which investors should buy stocks for the long term.
In February 2010, Focus Money stock market legend Jens Ehrhardt warned of a price setback, urging investors to sell everything: failing banks, over-indebted states, overheated markets. In April 2010, Roland Leuschel again said that despite or because of the rally, another collapse of the DAX to 2,000 points was likely.
At that time, the DAX stood at 4,000 and never reached 2,000 again. Albert Edwards, an analyst at Société Générale, said the stock markets would crash by 60 percent in 2011. In 2011, Jim Rogers, a well- known hedge fund manager, said there was a 100% chance of a crisis, even worse than in 2008. In May 2011, Max Otte, also a fund manager, said there would be a major crash in the next two years.
In June 2011, Felix Zulauf again said that prices would fall by 20 percent and that the bear market would last until mid-2012. In July 2011, Focus Money again ran the headline: "The euro crash is coming! We'll get your assets out of the danger zone!" Also in July, Mr. Ident, a well- known US stock market analyst, said that Matt Jones' stock price had plummeted from 12,000 to 3,000 points and that investors should stay away from the stock markets in 2012 and 2013.
Müller said that in 2011, the financial markets were threatened with collapse, and at the latest, three years later. He literally said it was five minutes to midnight and that this crash would be worse than ever before. In his opinion, the euro will no longer exist in three years, and probably in five.
In November 2011, Focus Money featured an analysis by five professors of the 2012 crash. In January 2012, Nouriel Roubini, a US economist and professor, stated that at least Greece and Portugal would leave the monetary union during the year. A return to the Deutsche Mark and a dissolution of the eurozone threatened.
In August 2012, Focus Money reported that a prominent government member, however, always said that the details would vary. One thing seemed certain: the monetary union would break apart within the next 18 months. In November 2012, another expert spoke out, stating that the probability of a crash was 60 percent.
Also in November 2012, Wolfgang Münchau, a German economic journalist, said that euro Armageddon was imminent. This prediction by George Soros, according to which the eurozone would last three months, was confirmed. "I have been far too optimistic for months," said Marc Faber, also known as Dr. Dom, a Swiss stock market investor, in August 2013.
" It smells like a crash; the US stock market will fall by 20 percent by the end of the year, maybe even more." Of course, that didn't happen either. Also in August, Roland Leuschel said, " I believe a halving is possible in the SNP proceedings, and I also believe in a 50 percent drop in the DAX." He added, "I am firmly convinced that a currency reform will come." In October 2013, Focus Money published a headline that was a warning for economists.
Also in October 2013, Trotha Finanz removed the headline. George Soros, also a billionaire investor, bet one billion euros through a put option on a collapse of the SMP. In June 2014, Marc Faber said, "Faymann will..." The Dow Jones will... " Falling by up to 30 percent," headlined Focus Money in August of the same year.
" You should sell all stocks." They'll report back in October. In the top right corner, you can flip through the various headlines from 2014. For example, in October, Focus Money reported that three Nobel laureates expected a crash. Martin Armstrong—well, my own movie was dedicated to him. As a Wall Street clairvoyant, he predicted something in April 2015.
He set up a system of complex mathematical formulas and believed that government bonds would crash on October 1st. That didn't happen. Shortly afterward, he renewed his prediction, saying they would scream on October 17th, and that didn't happen either. In 2016, George Soros again warned of an unprecedented disaster on the stock markets, betting on price crashes.
US investor legend Stan Backen Müller said, "Get out of stocks, get into gold." Andrew Roberts, chief analyst at the Royal Bank of Scotland at the beginning of 2016 warned that another stock market crash was imminent. Albert Edwards, an analyst at Société Générale, said in 2016 that the US stock market would collapse by 75 percent at the beginning of 2016.
As you can see, that didn't happen either. Again, Jim Rogers, the hedge fund manager, prophesied a typical collapse for 2016 or 2017, one that would cause many old institutions, traditions, political parties, governments, cultures, and entire nations to disappear. When you hear these predictions, you might conclude that the stock markets must have plummeted.
But what do we see? During this period, stock prices have risen almost continuously. We humans always make the mistake of thinking that our current problems are the biggest and forgetting the problems of the past. Even though there were problems in the past, as shown, for example, by the book publications about the economic future of Germany, the Jenoptik CEO and the McKinsey's head of Germany published the book "Can Germany Still Be Saved?" in 1993, where they attest to Germany's very poor condition.
In 2003, Hans Werner Sinn, then head of the Ifo Institute, Germany's most prestigious economic institute, wrote "Can Germany Still Be Saved?" and again stated that Germany's economy was in very, very bad shape. Just one year later, Gabor Steingart, former editor-in-chief of Handelsblatt, wrote "Germany: The Decline of a Superstar." And now again in 2015, Marcel Franz, head of the DIW, wrote "The German Illusion: Why We Overestimate Our Economy and Need Europe." So, warnings were regularly issued about how badly Germany would fare in the future.
But what about the reality that per capita income has risen? It has almost doubled since 1990. Yes, the next crash will come eventually. Of course, there will be another stock market crash at some point, but someone who prophesies a crash every two years doesn't become a clairvoyant; they simply accept this fact.
This is the nature of the stock markets, that there are occasional overreactions, and why do they try to act like clairvoyants? But why do all these forecasts fail? In my view, there are three main explanations. The first is that the problem is that analyses often have a kernel of truth, but that alone does n't allow for certain conclusions.
That's why most experts or investors leave, because just because there's a problem somewhere doesn't automatically mean there aren't any other problems. So, if we have problems today, we mustn't ignore the fact that since World War II, we've always had to contend with immense economic problems: high inflation, wars throughout the century, the Cold War, famines, viruses, pandemics, assassinations of presidents in the USA, good and bad presidents, and many other problems that we can hardly remember today.
But there are problems outside of today as well. Furthermore, just because these problems exist doesn't mean they ca n't be solved in the future. Even if these problems are n't solved, it does n't necessarily mean they'll become so big and lead to crises or crashes. For example, the 2008 financial crisis is, of course, very logically explainable in hindsight, but perhaps the worst could have been averted if central banks had immediately intervened to prevent collapses like Lehman Brothers, regardless of whether one approves of that or not.
This would likely have prevented half the losses. And precisely because we ca n't predict this behavior, we can't forecast a crash; that's impossible. This means that even if we have problems, even if these problems are significant, and even if these problems aren't intended to be solved, it doesn't necessarily mean that crises or crashes will actually occur.
And even if a problem does lead to a crash, we don't know when it will happen. It could be in five years, two years, five days, or ten years. We can't say that it will erupt at a specific time. There are simply too many possibilities. Too many variables that no human or computer algorithm in the world can predict, even if experts pretend they can.
Explanation number two is very simple: getting rich quickly and saving savings is easy to read, which generates clicks, generates circulation, and demand determines supply. People want to know how to get rich quickly or how to save their savings. This is partly due to the emotions of greed and fear, both of which are exploited by the media.
The media knows that we know what to put on the front page and they know what to name their YouTube video so that people click on it, and this is how such things arise. And the third explanation is that it's simply marketing. Crash predictions are excellent marketing for magazines, funds, precious metals, and stock market newsletters.
If I have a company and I want to build bunkers to protect against atomic bombs, I build nuclear fallout shelters. What do I do then? Do I publish a book and call it "Why the Third Nuclear War" or "Why the Nuclear War"? Why World War III is imminent – perfect marketing, and that's exactly what many experts do: they simply keep making crash predictions.
They know that this gets them into magazines, generates reach, and allows them to sell their funds, precious metals, or investment newsletters as a salvation. So it's simply excellent marketing. Investors don't really pay attention to whether these predictions are true or not, whether there's any truth to them.
Many people generally have a certain unease or distrust of the financial world simply because they have nothing to do with it themselves and hardly understand it. Then, of course, it comes in handy when some eloquent speaker suddenly prophesies the next crash, and people feel their general distrust is confirmed.
So it's simply excellent marketing for experts, regardless of the truth. Even Daniel Eckert from Welt am Sonntag says that the quality of the predictions is actually irrelevant. An astronomer who predicts a solar eclipse that then does n't happen would probably quickly lose his job. It's different with crash prophets.
The fact that their predictions don't come true seems to reinforce the aura surrounding them, according to the motto "there must be much more rotten at the start." Even Joachim Goldberg of the research firm Goldberg says that crash prophets are primarily more or less charismatic storytellers; whether their predictions come true or not isn't so important.
Yes, you've seen that every year there's some well-known expert who calls himself a crash prophet, some even several times, and it's never come true. There are many psychological phenomena that explain why investors and people always want crash predictions. Why an investor always prefers the book that promises salvation to the book that simply says everything will be alright.
We humans react more to fear, and that's why panic is often generated. Yes, and in some cases that may be true, but in the vast majority of cases it isn't. Investors who clung to these crash predictions have shown over the years that they haven't invested; they would probably never invest in the stock market.
And we They would miss out on a large part of the potential return, and if not the entire return, and would then have to settle for supposedly safe investments like money market accounts or savings accounts. " Supposedly safe" because the inflation risk has a significant impact there. I will also make a separate video about this, as this understanding is very important.
With this video, I don't want to say that there are no risks, that there won't be any risks in the future, that a crash is impossible, or anything like that. Quite the contrary. Of course, there are risks, and of course, there are things that can trigger a crash or short-term declines. But I want to temper this veneration of stock market experts and their crash predictions by simply and objectively showing the track records of these so- called experts.
Yes, there's no need to read too much into it; these are simply the statements and the stock market performance. What you make of it is, of course, entirely up to you. Personally, however, I know that I should base my investments as much as possible on such crash predictions, because I know they will come every year, and that their veracity is hardly verifiable.
The point is that their statements have little predictive power for subsequent returns. Let me know your opinion on this. Do you pay attention to such forecasts, or do you perhaps see things more critically after watching this video? I would certainly be happy and interested to hear your thoughts. So please write your opinion in the comments, keeping in mind that this is a controversial topic and everyone has different approaches, which is perfectly fine.
I want to provide a picture for those who are fact-oriented and then discuss your thoughts with you. Of course, I would also appreciate a thumbs up if this video has given you new insights. Subscribe to this channel for free so you don't miss future videos. If you want to find out how to invest successfully in the long term without crash predictions, you can also check out the video description, where I've compiled several links for you.
This video was created to help you learn more about how to invest successfully on your own again, and as I said, without crash predictions. How to survive the stock market downturn and, above all, become more relaxed about it. But more on that later, as I said, on my website or in one of my future videos. In that spirit, take care, stay rational, stay rebellious, and until then...
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