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Tom Winnifrith: a reader dares me to publish his explanation of why I'm talking bollocks

By Tom Winnifrith | Wednesday 5 December 2018


 


I wonder if this reader is Malcolm Stacey in disguise? He seems a terribly optimistic fellow dismissing all my bear points made in today's bonus bearcast. Calling himself "KeepingTWhonest" he opines:

There is a flaw in Tom's argument 'Market Crash'. The lack of a single true trigger point. Below I set out my reasons why most of the points are very unlikely to start a long term market fall.

1. European Banking Crisis - Any failing banks will simply be restructured (or not - as was the case in Japan).
2. The Collapse of the Euro - It will survive because the Euro area is a huge trading block that is self sustaining, much like the 'Federal' USA.
3. Corbyn as PM - Any stock market slump will be a short lived 'one-off' because he will come to grief quite quickly on the cross of 'Nationalisation' and will be thrown out.
i.e. He will not get sufficient votes from his own party be able to decimate the UK economy and will quickly be forgotten.
4. UK Property Bubble Collapse - UK property prices are likely to fall, but 'Help to Buy' should keep employment up - reducing the economic impact. BTW - a falling pound is not a bad thing.
5. A consumer Spending Slump - To my knowledge consumer spending never initiates a stock market collapse, it is usually a RESULT of collapses elsewhere.6. Neil Woodford - - In reality he should be sacked - the sooner the better. The funds can be rescued. But you do make a good point here, because regulators and non execs
are weak, so a 'Fund sector collapse' caused by Woodford is real weakness. But a few weeks later the headlines will be wrapping up fish and chips.
i.e. Any stock market fall will be a minor and temporary and will quickly be forgotten.
7. FAANGS / Tech / Unicorns - A Collapse. There is no obvious reason for this. Buffett has bought a massive stake in Apple. Facebook is a massive cash generator and still has
underlying revenue growth. Even if it does happen, the US share prices might fall, but the UK is not really exposed to it and we will likely get a repeat of
the dot com collapse (i.e. the UK did not go into recession)
8. China - SeePoints 1 & 2 - i.e. Europe and the Euro (i.e big enough internal economy to survive even if growth reduces and banks collapse).

There is a ninth UK weakness -
A serious reduction in world growth that hits the UK (especially a post BREXIT UK), but I cannot see anything obvious that will cause this to happen.

Ends
 
Okay pal go FYB. I think you will regret it 


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