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Will the stock market crash in 2022?
03 Jan 2022 (646 views)  

The financial media has many experts making all kinds of prediction for the stock market in 2022. 

Many experts expect a crash or a correction in 2022 due to inflation, leading to higher interest rate and a slowing economy. 

Others expect the economy and the stock market to remain steady. Few are expecting spectacular growth in 2022.

I give my perspective. 

The experts are making their prediction for the US stock market. The current PE ratio of S&P 500 is 39.2, which is 96% higher than the modern day average of 19.2. See this report

I have no doubt that this PE ratio is too high. The US stock market is overvalued. It will crash by up to 50%, to bring it down to the long term average. 

This comment applies to all the top winners, such as Amazon, Microsoft, Apple, Facebook, Walmart and others. 

However, this does not apply to good quality stocks around the world that are more moderately priced, based on PE ratio.

I invest in many China stocks with PE ratios of less than 10 times and dividend yield of over 4%. These are the stocks that I bought in Hong Kong exchange which now have a discount of 25% to 80% of the price in Shanghai.

If these stocks are bought in Shanghai or other exchange in China, the PE ratio will be higher, but are still attractive. 

I am confident that the China stocks that I invest in are of good long term value, in spite of the uncertainty of the economic growth in China and the controls on monopolies and certain sectors. The low PE ratios already accounted for these uncertainties. 

I am not worried about the stock market crash, as it will affect the US stock market. I expect the China stocks to continue to do well.

Tan Kin Lian

Note - This is a personal opinion. It is not investment advice. 



 


Will the stock market crash in 2022?
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The financial media has many experts making all kinds of prediction for the stock market in 2022. 

Many experts expect a crash or a correction in 2022 due to inflation, leading to higher interest rate and a slowing economy. 

Others expect the economy and the stock market to remain steady. Few are expecting spectacular growth in 2022.

I give my perspective. 

The experts are making their prediction for the US stock market. The current PE ratio of S&P 500 is 39.2, which is 96% higher than the modern day average of 19.2. See this report

I have no doubt that this PE ratio is too high. The US stock market is overvalued. It will crash by up to 50%, to bring it down to the long term average. 

This comment applies to all the top winners, such as Amazon, Microsoft, Apple, Facebook, Walmart and others. 

However, this does not apply to good quality stocks around the world that are more moderately priced, based on PE ratio.

I invest in many China stocks with PE ratios of less than 10 times and dividend yield of over 4%. These are the stocks that I bought in Hong Kong exchange which now have a discount of 25% to 80% of the price in Shanghai.

If these stocks are bought in Shanghai or other exchange in China, the PE ratio will be higher, but are still attractive. 

I am confident that the China stocks that I invest in are of good long term value, in spite of the uncertainty of the economic growth in China and the controls on monopolies and certain sectors. The low PE ratios already accounted for these uncertainties. 

I am not worried about the stock market crash, as it will affect the US stock market. I expect the China stocks to continue to do well.

Tan Kin Lian

Note - This is a personal opinion. It is not investment advice.