A Stock Market Crash Could Be Coming Soon

The Trump Rally continues to break records as the Dow topped another all-time high [on Tuesday], hitting 20,754.88. But these record highs won’t last.

In fact, Money Morning Global Credit Strategist Michael Lewitt just pointed out some major signs that a stock market crash could be on the horizon…

The explosive stock market growth since the election has been a windfall for investors. Just look at how fast the Dow jumped from 19,000 to 20,000 in the chart below.

But Lewitt says this rapid growth is pushing stocks to unsustainable levels. He even says these soaring highs are a sign of a stock market bubble.

“Markets are in the midst of an epic bubble that is being ignored by investors at their peril,” Lewitt tells us.

[ad#Google Adsense 336×280-IA]And a bubble like this means investors need to be prepared for a 2017 stock market crash.

But investors don’t need to panic.

They can be prepared.

That’s why we’re going to show you how to protect your money during a financial crisis.

First, here are the warning signs Lewitt says are a sign of a stock market crash coming this year…

Are We in for Another Stock Market Crash?

With stocks trading well above their economic fundamentals, a market correction could lead to a massive sell-off and a stock market crash in 2017.

As Lewitt explains, the S&P 500 climbed 10% last year even though corporate profits remained flat. Plus, the S&P 500 hasn’t seen a drop of at least 1% in 84 trading days. The last time the S&P 500 went that long without a 1% decline was over 10 years ago in 2006.

“If investing were really this easy, everyone would be rich,” says Lewitt.

You see, the S&P 500 is trading nearly 21 times above GAAP earnings. Its current Shiller P/E ratio, a measure of overall stock market value, is 29.29, the highest level it’s reached since the dot-com bubble. That’s even higher than before the 2008 stock market crash.

This is why Lewitt is warning us “every market signal I see tells me that we are deep in bubble territory.”

But you can protect your investments before it’s too late. And Money Morning is here to help.

Here’s how you can “go against the crowd” and protect your money from a stock market crash in 2017…

Where to Put Your Money Before a Stock Market Crash

Lewitt says investors need to “cut back on your market exposure” and hold cash.

“Cash has enormous option value, and the greatest option value exists at times of maximum uncertainty,” explains Lewitt.

Pulling out of the markets can feel wrong when stocks are shattering records. But losing money will feel much worse when the market corrects and stocks sell off.

It’s impossible to precisely time a stock market crash, but when the stock market is overvalued to this level, it’s better to be safe.

Getting out of the stock market “may seem unthinkable today in the midst of an epic bull market,” says Lewitt, “but that is precisely why should be taking precautions rather than participating in the madness.”

And by holding cash now when the market is extremely overvalued, investors can wait until the market corrects to buy back in at a discount.

— Dustin Parrett

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Source: Money Morning