Multiple Risks Are Converging on Markets

One of the questions I am asked most frequently in my global travels is what will be the cause of the next financial crisis. This question is asked by those who understand that this crisis is coming but want to pin down the date or a specific turn of events that will help them know when to react.

My answer is always the same: We can be certain the crisis is coming and can estimate its magnitude, but no one knows exactly when it will happen or what the specific catalyst will be.

The second part of my answer is to prepare for the crisis now. When it happens, it could unfold very quickly. If you’ve been paying attention to the stock market lately, you know how quickly selling fever can spread once it starts. Just look at these past two days alone.

We’ve had multiple days since October when the Dow loses several hundred points, with the other major indexes posting similar losses on a percentage basis.

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