The rising crude oil prices is triggering the slowdown of global economy. Will it convert into a global economic recession or not; it will be solely decided by oil prices. The non-OPEC world's wealth is transferring to OPEC nations at a fast pace.
Since the stock market discounts future, therefore all industrial assets i.e. shares are falling like a house of cards across the globe. This trend may continue for quite sometime, may be a few months or it could be 1 or 2 year; it all depends upon oil prices. If crude stays at higher level then certainly we will witness a long bear market. And, where will be bottom? No body knows ! Being integerated to global economy, even long term growth story of India will take backseat and Sensex will be testing newer lows for quite some time.
In the eighty's decade the global liquidity moved to Japan and it took Nikkei to 39,000+ level at the start of 1990. Same story got repeated when global money got centerd around technology stocks and Nasdaq rose to 5000 levels in 2000. In this decade, when we are nearing it's end, the global liquidity is chasing commodities- crude oil and other commodities- and it has resulted in a bubble like situation. This bubble is going to have highly damaging impact on global economy and all assets may it be shares or real estate, will have only one directional movement i.e. downward.
As it is, even after a devastating earthquake, life again starts. Likewise, even after this bubble is burst, we will witness better asset valuations in the longer run. However, it may take a lot many months to see better price levels from the current one.
If you want to avoid further fall in stock prices, then please visit my blog at:
www.act4commongood.blogspot.com
In this blog I have described a powerful plan to bring down crude oil prices.
Before I sign off, I wish you all Happy Investing.
