Rajivpatel

BUSINESS COLUMNIST FOR SWISS RADIO AND TELEVISION

Follow Rajiv and watch his videos on Facebook and Twitter.

Rajiv Patel is economic attaché at the Embassy of India in Berne and business columnist for Swiss Radio and Television. He has a degree in finance from the University of Delhi and does management consultancy for large corporations worldwide. He enjoys cricket, sudoku and love songs.

So when will the bubble burst?

Dear Rajiv,

So when will the bubble burst?

Anup B., New York

High fives, my friend, for such an excellent question! In business magazines, you can really count on words like “bubble” or “burst” to catch the reader’s attention. By asking me, you are also reaffirming my status as a highly respected investment guru, capable of making some sort of spectacular prophecy within the next few lines. So do read on!

What has happened since the financial crisis six years ago? In March 2009, the S&P 500 stood at 666 points: depressingly low. As it rose steadily during the following months, passing the 1000 mark in August and reaching 1200 soon afterwards, only a fool would have expected the markets to keep soaring upwards. Remember, while governments pump taxpayers’ funds into oversized banks and keep spinning the money wheel, nobody is solving the deeper problem of deflating an overleveraged society. The system is as doomed as a chicken that will end the day as tikka masala.

At this point, any reasonable investor would have sold all his assets and stocked up on gold, silver, and a 50 kilo sack of Basmati rice to ride out the storm. But amazingly, the markets kept right on rising. Did printing more money stop it? No. Did the euro crisis stop it? No. Did war in Syria, Libya, Ukraine, Iraq, and Gaza stop it? No! Not even India’s humiliating defeat by England in cricket earlier this month could stop the S&P 500 from reaching the mind-boggling level of almost 2000 points, which is where it sits today.

So do you want my prediction? Here it is: Expect a meaningful correction in the near future. Maybe even a 30 percent drop in the next year or two. If it doesn’t happen right away, it will happen sometime later, or perhaps the month after that. But no matter when the next crash does hit, one thing is for sure: I will be glorified as the man who predicted it. And oh my gosh, that is what we gurus live for!

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