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Market Watch: Do NOT Buy the Dip, Warns Investor Who Says a ‘Brutal Bear Market’ Looms

Article by Shawn Langlois in Market Watch

Kevin Smith, chief investment officer at Crescat Capital, says the bear case for U.S. stocks has never been stronger” and it’s time for investors to be aware of the “gravity” of the current situation.

“We certainly did not predict the Coronavirus, but it may prove to be the catalyst to tip this market that is trading at truly historic valuation levels after a record long U.S. economic expansion,” he told clients in a note this week. “Median EV-to-sales for the S&P 500, based on our work recently reached an insane, euphoric level of 3.6 times, two times than the tech bubble peak.”

“A top this month would certainly make sense to us given the recent overbought conditions, unsustainably high bullish sentiment levels, bear capitulation, and deteriorating macro indicators,” Smith wrote.

He said the median enterprise value-to-sales is one of the best ways to understand just how inflated the current stock bubble is. The ratio is seen by many, including Smith, as more accurate than other more commonly cited valuation metrics in part because it takes company debt into account.

“Investors will need a good grounding in valuation and business cycle analysis to reject the common buy-the-dip advice that is soon to become prevalent in the still early stages of what is likely to become a brutal bear market,”he warned.

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Although the information in this commentary has been obtained from sources believed to be reliable, The Gold IRA Company does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. The Gold IRA Company will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.