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Man looking into the vortex of stocks and the economy

Beware of the “Sucker Rally”

AngelaRoberts

Written by Angela Roberts

Jun 4, 2020

As a little girl growing up on a farm in Nebraska, I knew the wellbeing of my family’s crops was the difference between life and death. All year round, I watched for signs of infestations and infections on the leaves of our corn and soybeans. If I noticed any indication of blight, it was imperative to act quickly. Hesitating to fix this small problem could cause it to ripple out and destroy the entire year.

I was also concerned with the weather. Not just the immediate weather of today and the rest of the week, but what to expect for the year as well. What we planted in the spring was affected by our expectations for the summer climate. I was concerned about a drought rolling in, and I knew the stories of the American Dust Bowl by heart.

So, what did we do? We looked at the Farmers’ Almanac. Each year’s volume had forecasts for the year ahead, along with plenty of other useful information. It wasn’t always right, but it was always worth consulting. These were high stakes for me and my family, and all pieces of information were worth considering.

Even now, as the CEO of a company, these concerns still come back to me. But they manifest themselves in different forms. When I view the markets, sometimes I wonder:

Is there a weather report for the long-term market rally?

The market seems to be on its way up since it first crashed. Stocks are steadily climbing. But could this be what commentators and analysts call a “sucker rally”? Is the economy really back for good? Or could there be more trouble down the line, with another drop on the way?

If you are holding a financial portfolio, these are the kind of questions you must be asking. When your retirement or your family’s future is in your hands, it’s important to keep watch on the sky for potential signals.

It’s impossible to know for certain what will happen next. Sometimes it’s best to see what the experts are doing and how the insiders on Wall Street are behaving.

A recent survey conducted by Bank of America Global Research found that 68% of fund managers believe that the rally in the marketplace is a temporary bounce.

This means over half of these experts think there is still more negative consequences coming for the stock market. They are so certain, in fact, that these hedge fund managers have significantly raised the amount of cash they are holding in their portfolios in case of the sudden need for liquidity.

In the report, analysts at the bank explained: “With fundamentals continuing to look weak…the risk is getting forced into chasing a reflexive bubble in a late-stage bear-market rally.” This isn’t an uncommon sentiment. According to Reuters, officials at Goldman Sachs have written, “The rally is unloved,” in a note to their clients.

All these big institutions employ experts and analysts to look at the financial landscape and try to predict what is coming next. What they are seeing has made many of them forecast a new drop, and we can expect it on the way soon.

Are you prepared for what could happen if they are right?

Every American who wants to safeguard their assets needs to consider what they will do if the worst comes to pass. They need to be ready to face the possibility that this stock market rally isn’t a true rally, and that more pain could be on the way. We should all be taking a look at what the experts are saying. It is vitally important to protect your wealth, no matter what outcome heads our way.

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