According to this article [via Jack], interest rates are very likely to start climbing soon (I agree). And as that happens, financial investments like stocks and bonds lose value (standard Economics 020 stuff).
The first week of June recorded the highest interest rates since December. Bond prices are down about 12% since the end of January.
The stock market, meanwhile, follows the bond market’s direction — except by a much wider margin. A multiple of 2.0 is conservative. A 2x multiplier figured against the recent 12% plus loss in bonds prices would generate a 24% decline in stock prices. ...
So pay attention to rising actual rates. The “actual” bond market is already into a bear market, with declining tops and lower lows since the end of January. The stock market is vulnerable here. The first week of June saw interest rates spike, with bond prices losing 2.5% of their value. This is comparable to around a 7 1/2% loss in stock prices in one week.
The pressures are increasing exponentially since the decline in bond prices has not resulted in a stock market slide [EE: yet]. And the greater the pressure, the greater and quicker will be the downward move.
In preparation, I recommend that people beat the drop/crash/whatever and go liquid now (T-bills, money-market instruments, etc.). Of course if everyone agrees with me (and with this article [and others -- see the links below]), the drop/crash should have occurred already. So either the articles and I are wrong, or the efficient markets hypothesis ain't all it's cracked up to be; or both.
JR (my favourite drug dealer) and I have already gone liquid, specializing in scotch.