Elon Musk predicts a US depression next year that could last 18-months — and warns investors about being cautious

Elon Musk.REUTERS/Lucy Nicholson
Elon Musk predicted a US recession in the next year, which could last until the second half of 2024.

Elon Musk predicted that the US would experience a severe economic recession for up to 18 months. He recommended that investors take fewer risks, conserve cash, avoid debt and take fewer risks.

Musk stated that “it does seem like we are headed into a recession here, in 2023” during an episode on the “All-In Podcast”, which was released on December 24, 2018.

He said, “My best guess would be that we have stormy periods for about a year to one year and a quarter, then it’s roughly Q2 2024 when the dawn breaks,”

Tesla CEO, SpaceX CEO, and Twitter CEO, noted that the severity of the coming recession isn’t yet known, but could be as severe as the 2009 slump that followed the collapse in the housing bubble.

Musk advised investors to prepare for difficult times by setting aside cash and taking prudent bets, without borrowing money.

The technology billionaire stated, “Hope for good things but be prepared for the worst.” “Don’t get too adventurous. Keep your powder dry, both financially and in terms of time.

He said, “I strongly advise people not to have margin debt in volatile stock markets.” Margin debt should be avoided in times of panic or mass market collapse.

Musk has been sounding the alarm about the imminent recession in recent weeks. He also warned that the Federal Reserve’s series of interest rate hikes this year have increased risk of a severe downturn. The US central bank raised interest rates from nearly zero in March to more than 4% today. They also indicated that they may reach 5% next year as a response to the rapid inflation.

Higher rates may help to relieve price pressure by reducing spending, borrowing and hiring. However, they can also lower asset prices and erode corporate profits and cause the economy shrink.

Musk still suggested that the US economy was “overdue” to a recession after a 14-year uninterrupted expansion.

In recent weeks, Jeff Bezos (Amazon’s founder, executive chairman) offered similar advice to Musk. He warned Americans about a possible recession and suggested that they “batten down their hatches” and take fewer risks. Also, delaying large-ticket purchases in order to save cash.

Continue reading: Rob Arnott is paid by the world’s most prestigious investment firms for his advice. He shares 2 trades that he believes will yield 15% annualized returns over 10 years. And explains why there is a “decent likelihood” the market will see new lows.

Business Insider has the original article.
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By: tmohamed@businessinsider.com (Theron Mohamed)
Title: Elon Musk predicts a US recession next year that might last 18 months — and warns investors to be careful
Sourced From: markets.businessinsider.com/news/stocks/elon-musk-tesla-recession-stock-market-outlook-fed-margin-debt-2022-12
Published Date: Thu, 29 Dec 2022 11:30:15 +0000