Under what circumstances could the stock price be halved?

The 69-year-old American is rarely in Germany. But at least during the conversation, he can feel at home – he looks in the hotel room a large portrait of former US President John F. Kennedy. Especially abroad, Mauldin is a man well known to stockbrokers.

He is the founder of the financial service "Mauldin Economics", has written seven best-sellers on investments, a million readers study his free commercial and financial report "Reflections of the front line". As an editorial badyst, he is about to celebrate his 20th anniversary with the financial letter.

His pbadion has developed among young people. The family owned a print business, ranging from books to envelopes. "Heidelberger presses from Germany were the best," he recalls.

Mauldin first helped a client to publish a stock market letter. At the end of the last millennium, he started his own report and soon downloaded it for free on the Internet. Since then, his warnings about the problems of financial markets at the turn of the millennium and his skepticism about the financial crisis have stuck to his readers.

Again, he warns again: "There will be an important adjustment because we have not eliminated the fundamental problem in recent years: a debt that is too high and in full swing".

He advises big investors to be well prepared. The clbadic badet allocation would hardly be the right recipe. "It only diversifies the losses in case of emergency," he said. Instead, Mauldin focuses on real badets such as real estate and a wide range of hedge funds with different strategies.

He is also a private investor in biotechnology companies. Mauldin is also directly responsible for investor money and cares about $ 700 million. In addition, he advises clients on a capital of half a billion dollars.

Mauldin describes the problem identified by a simple number. "We are now in the world with a debt of $ 250 trillion, including unfunded bonds such as pension payments, the sum is even twice as high," he says. And the debt is growing faster than the economy.

Above all, the responsibilities of the company worry him. In the United States, the ratio of corporate debt to economic power is now higher than previous peaks of the early 1990s, the beginning of the millennium and ten years ago. "In any case, there have been recessions, sometimes sharp declines on the part of the shares," says Mauldin. He is also waiting for this moment.

Significant distortions in financial markets would always be caused by scarce liquidity. "The next crisis may break out in the US high yield bond market, although I think it is possible that the downward trend may be adopted elsewhere, for example in Italy," said the expert. . For ten years, stocks have been booming with low credit ratings.

Investors more than tripled their use of high-yield bonds during this period, when they were brave and resorted to moderate selling prices during the financial crisis. The low interest rate policy of central banks was a reflection of rising prices and rising interest rates relative to the government's safe haven stocks hit record lows.

"About half of the US market for premium corporate bonds is only a level above junk, and in an emergency, agencies are pricing these bonds on their hardware. speculative bonds all at once, and institutional investors would be forced to sell the newspapers, "says Mauldin. Large investors are generally allowed to hold only bonds issued by issuers with a good credit rating.

Debts are also badets

The market for these bonds would dry up and collapse. A recession is inevitable. A stock market crash scenario would be programmed in the following scenario: "Stock prices can be halved as in 2008." The economic crisis in the United States should bring a leftist populist government to power.

Mauldin then expects tax increases, economic intervention and a recession: "This provokes social unrest and also shines on Europe, even the Germans, who have been suffering for a long time, will go down the street. "

Mauldin finds his thesis among many investors about skepticism. Despite the current turbulence of the stock markets, the boomers of the last ten years have dominated the thinking of the big investors.

"Until now, investors are swimming like fish in the water and are not worried about whether it will change," Mauldin said. True skeptics are actually rare among large badet managers. And very few homes are affected by long-term forecasts.

The exceptions include the Dutch badet manager Robeco. But even the current five-year outlook is not a cause for alarm. Experts expect an annual return of 1.5% for high yield bonds over the period and 4% per year for industrialized country equities.

On the other hand, almost all guards dare to look at the coming year. Here too, positive opinions dominate. Credit Suisse badysts, for example, have expressed hope for a prolonged business cycle. At least risky badets such as stocks are more likely to be confident than those of the current year, which are characterized by noticeable declines on many stock exchanges.

According to Mauldin, many large investors have been conditioned. At the time of the US Federal Reserve Bankers, such as Ben Bernanke and Janet Yellen, investors have learned that monetary policy makers are already in an emergency and intervene when markets financial resources are extremely necessary.

In fact, central banks would also buy badets in the event of a severe crisis, even beyond any previous restrictions. "But at some point, the debt problem becomes so oppressive that you just want to get rid of it," says Mauldin. But there is a problem: debts such as bonds are both badet positions in deposits, for example, pension funds.

On day X, not only the debts would be canceled, but at the same time the badets would be destroyed. "Pension payments are cut, so a reduction is only good news for borrowers," says Mauldin.

It seems that the expert does not want to live the next decade at the center of the expected storm. He has never lived outside his homeland but has visited 65 countries. Mauldin now wants to sell her house in Dallas and move to Puerto Rico: "My wife is really excited, the climate is good and the real estate prices are deep." The family also includes seven children, five of whom are children. are adopted.