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Make no mistake, there's going to be a stock market crash.
But that doesn't mean you shouldn't be in the market. You absolutely should be.
In fact, being fully invested makes sense. Markets don't crash without giving investors a warning.
Despite the fact we're now more prone to a 1987-style crash than ever, there are strong reasons why you should be invested.
Being on the sidelines while stock markets are regularly making higher highs is a loser's game. Sure, the market can crash, but what if it goes up for another five years and you're still waiting?
Here are what the warning signs will look like and how you can make a quick fortune on the next crash...
How to See a Crash Coming from a Mile Away
No one knows when this raging bull market's going to top out, turn, or crash. And no one should worry about it.
If the market tops out, there'll be plenty of time to take profits and position yourself for whatever's coming next. If the market turns down, it won't happen quickly, and you'll have plenty of time to position yourself for whatever's coming next.
The only thing to be concerned about is a crash because when the market crashes, it happens quickly.
But even that won't happen without warning.
Every major market crash (the panic of 1907, the 1929 crash, Black Monday in 1987, the 2000 tech wreck, and the 2008 crisis) gave investors plenty of warning.
Personally, I had a great day on Oct. 19, 1987. I got completely out of the way of the tech wreck after riding it up, had sold everything, and started shorting stocks in September 2008.
Bubbles are easy to spot, everyone sees them. It's just what you do about them that matters.
The question today is, are we in a bubble? The answer is NO.
All the historical valuation measures of stocks and markets point to them being fully valued, and that doesn't mean they're overvalued or anywhere near bubble territory.
The domestic and global macro view of economic growth is positive. In fact, it's very positive, relative to the past decade of subpar GDP growth.
With the United States and most of the world growing again, there's plenty of room for corporate earnings to improve. Even though stocks may be fully priced, accelerating growth will pad corporate revenue and earnings and keep them from becoming overvalued and entering bubble status.
The big companies leading markets higher, the tech darlings and industrial multinationals, are all capable of expanding their market share and profitability.
When investors look at those companies objectively, they see their extraordinary growth potential and are willing to pay up for their earnings potential. That means earnings per share by multiple measures are high for most of the leading companies, but justifiable if they continue to expand their profitability.
With growing earnings, stocks aren't going to suddenly roll over.
There'll have to be a catalyst, typically an external catalyst, as there always has been preceding a crash.
External catalysts today could include war breaking out with North Korea, a nuclear device being detonated somewhere, a sovereign debt default, a cyberattack on critical infrastructure in the United States, or something that threatens business and commerce.
The buildup and unfolding of a catalyst can usually be seen from a distance and allows investors time to react.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.