Some Big Wall Street Players Are Starting to Sweat a Crash

Shah Gilani

When it comes to the stock market, everything’s always all good… until it isn’t.

And it’s been all good: U.S. stocks have been rallying for nine years, making successive all-time highs, with only sporadic bouts of profit-taking by the Nervous Nellies along the way.

But now, some huge investors – marquee names – are getting nervous.

And they’re letting people know about it, too…

Between them, these giants are pushing around close to $1.7 trillion in capital – more than enough for them to be able to make waves wherever they go.

I’m going to show you what to do if these whales are right; they just might be…

Meet the (Very Wealthy and Powerful) Bears

Ray Dalio, founder of Bridgewater Associates LP, the world’s largest hedge fund with more than $150 billion under management, believes the “magnitude” of the next downturn will be epic. “We fear that whatever the magnitude of the downturn that eventually comes, whenever it eventually comes, it will likely produce much greater social and political conflict than currently exists,” he recently said.

Former “Bond King” Bill Gross, founder of PIMCO LLC and now legendary portfolio manager at Janus Henderson, says, we’re at the highest risk levels since 2008 because “investors are paying a high price for the chances they’re taking.”

Naturally, founder and CEO of DoubleLine Capital Jeff Gundlach – the new “Bond King” – advises “moving toward the exits.” Gundlach’s reducing his positions in junk bonds, emerging-market debt, and lower-quality investments, because he believes investor sentiment will turn negative. “If you’re waiting for the catalyst to show itself, you’re going to be selling at lower prices,” he told Bloomberg.

Wall Street icon Carl Icahn, who regularly loads up on stocks and hits it out of the park, warns he isn’t seeing opportunities given how much stock prices have run up. “I really think now, I look at this market and you just say, ‘look at some of these values,’ and you have to wonder,” he lamented in a CNBC interview in June.

Oaktree Capital founder Howard Marks has been talking about “too-bullish territory.” The billionaire warns “aggressive investors are ‘engaging in willing risk-taking, funding risky deals, and creating risky market conditions.’”

Legendary hedge fund guru George Soros, who in 1992 “broke the Bank of England” and pocketed more than $1 billion doing it, recently sold stocks and bought gold… after a near 10-year hiatus. Just to give you an idea, the last time Soros made a big play was in 2007, when he placed bearish trades on housing in the run-up to the meltdown.

Appaloosa Management’s David Tepper warns investors to stockpile some cash and says he’s “on guard.”

“Everything is expensive and we are late in the business cycle," Sebastien Page, head of asset allocation at T. Rowe Price, said in an interview with Bloomberg. "That introduces fragility for risk assets, and there isn’t much buffer."

So, that’s a lot of negativity. But don’t let it ruin your day. Do this instead…

How to Stay Invested and Sleep at Night

Join the conversation. Click here to jump to comments…

Shah Gilani

About the Author

Browse Shah's articles | View Shah's research services

Shah Gilani is the Event Trading Specialist for Money Map Press. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains.Shah is also the proud founding editor of The Money Zone, where after eight years of development and 11 years of backtesting he has found the edge over stocks, giving his members the opportunity to rake in potential double, triple, or even quadruple-digit profits weekly with just a few quick steps. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.

… Read full bio