3 Things that Could Quickly Kill the Market

Everybody is making money hand over fist, and everyone is on TV saying that nothing can derail this rally. Well, there are plenty of things and I am not going to list them all, but here is an idea.

Our stock market is booming.  Why?  It seems to be largely due to the iPhone (a silly consumer electronic device which really isn't a phone because the battery cannot be changed, as someone else has pointed out here) and the emerging markets.  Here's an idea what could cause things to go in reverse:

1) Apple announces that iPhone sales were less than the 1 million that they and everybody else estimated that they would sell within weeks.  Even worse, Apple comes clean and announces that they have sold just over half a million and that they don't expect to sell 10 million units before the end of 2008, but are rather shooting for 5 million.  They also fail to sign with any carriers other than ATT.

2) Emerging markets submerge.  For all of the complaints that everyone has about our regulatory environment, it is designed to protect the investor.  These kinds of protections aren't there in China or Vietnam or Brazil or any of the other economies upon which our economy is now relying.  As we saw in 1998, it took a hiccup to take down SE Asia and send reverberations across the globe.  The Chinese market is so overvalued, it could fall 50% and the valuations would still be ridiculous.  There is no magic in the Olympics and there is no certainty that there won't be a tremendous crash beforehand.  This isn't a market which is going to grow into its valuation, but it is one which is going to crash first.  I'd expect it sooner rather than later.

3) Muslim terrorists decide to remove Washington or Las Vegas.  We are due for something that will make 9-11 look like a nuisance.  These crazies are trying every day to kill us in large numbers.  As Chertoff has said, the US needs to be correct every day and these animals just need to be lucky once.  They are going to be trying harder to do something before Bush leaves office, and so again, I am expecting it sooner rather than later.

I've outlined some "colds" here.  It could be one of these things or it could just be a sniffle, but things aren't quite as rosy as they might seem.

In the meantime, enjoy your profits on the market.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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  • Anonymous

    July 17, 2007

    Something could always go wrong in the world. If you wait for the shoe to drop, you'll always be sitting on the sidelines. Go with the trend but cover your risks. That's my advice.

  • Anonymous

    July 18, 2007

    The market will come down dramatically without any of the doom and gloom materializing. It is overvalued - pure and simple.

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