Prediction: A Stock Market Crash Is Coming. Here’s What Investors Should Do Based on Warren Buffett’s Advice.
Stocks generally trend higher over the long term, but it’s getting harder to ignore the growing chorus of risks that could derail the current bull market. Neocloud companies, which operate artificial intelligence (AI) data centers, are finding it harder to access affordable funding to build more infrastructure, which could put a dent in the sales of semiconductor suppliers like Nvidia.
Moreover, rising oil prices are stoking inflation, which prompted the Federal Reserve to raise interest rates at its September meeting, and more hikes might be on the horizon. High interest rates can be a major headwind for the stock market, particularly now, when so many tech companies are borrowing money to build AI infrastructure.
To make matters worse, the S&P 500 (SNPINDEX: ^GSPC) is trading at the second-highest valuation in its history, behind only the peak of the dot-com internet bubble in the year 2000. In my view, this leaves the index especially vulnerable to a crash, but legendary investor Warren Buffett has some excellent advice for navigating these very situations.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.