This years recent tumble in the stock market is eerily similar to sell off that began 11 years ago. The following chart shows the MSCI USA Index overlayed with the MSCI Japan Index with an 11 year lag…could this be a sign of things to come? Let’s take a look.
While the U.S. stock market has dropped only about 15% since the April high you can see in the above chart that the Japanese market cratered about 50%.
Just as Japan was dealing with an expanding debt burden and slowing economic growth over a decade ago, the U.S. is experiencing a similar situation. The situation is so dire that Standard & Poor’s cut America’s top AAA credit rating and the Federal Reserve has stated it will not raise interest rates for the next 2 years.
There is one slight difference. During their financial crisis, the Japanese central bank did not add liquidity to the system. As we all know, Ben Bernanke opened the spigot and flooded the our markets with liquidity.
Whether this move will help us to side step a decade long recession or simply delay it is anybody’s guess but I’m not waiting around to find out. In fact, I founded Ropay Asset Investors to help you take advantage of the current economic conditions.
Contact us today and find out how you can take advantage of the huge opportunity that currently exists in the charged-off credit card market.
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chart courtesy of Bloomberg U.K.