The US bubble will crush the world

Fri 03 Nov 2017

By Brian Dennehy

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Although the US might be at the centre of an extraordinary stock market bubble, you do not escape the consequences by being invested elsewhere. Strange as it might seem US-centric problems often hit the rest of the world more severely.

Here is a chart illustrating the point in 2008, from 1st September to 27th October.

bellA lot of you have enjoyed a very focussed exposure to the upside action this year - throughout Asia, including China, India and Japan, and in some outstanding smaller company funds (UK, US and Europe).
 
I am more keen than ever that you do not lose all of those gains and more. Although the US might be at the centre of an extraordinary stock market bubble, you do not escape the consequences by being invested elsewhere. Strange as it might seem US-centric problems often hit the rest of the world more severely.
 
Here is a chart illustrating the point in 2008, from 1st September to 27th October.  You can see that the US stock market was down 22.38%, but at the other extreme European smaller companies, China, and emerging markets were down 36%, 40% and 42% respectively – in less than 2 months.
 
On this occasion we fully expect the falls to be faster and deeper – but that’s analysis for another week.
 
Chart 1 - US Dollar Bubble

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