Is the market crash inevitable?

[userpick]

As oil prices plunge lower and lower, it is getting increasingly scary. Where does everyone think the market is going?

[HawgWild]

I came to the realization a few years back that I don't have a clue to what's going on. 

[aristotle]

I don't see how raising interest rates can not crash the stock market. It's been bid up on cheap dollars, ZIRP funding, record margins, and stimulus to record highs. There is a major divergence in the world between the US and the rest of the planet. Will the rest of the globe catch up to the US, or will the US catch down to the rest of the globe?

Anybody's guess, but I'm leaning towards the latter.

[tophawg19]

possibly a devaluing of the American dollar .

[aristotle]

possibly a devaluing of the American dollar .

Doesn't seem likely in the near term. With the EU engaging in massive QE and negative interest rates, it is the opposite which seem more likely. An increase in value of the USD coinciding with the raising of interest rates in the US and completion of its own QE programs.

If the market crashes, the funding currencies (JPY and soon to be EUR) will get unwound in a hurry causing massive deflation, and thence recession.

[Old Tusk]

I have been operating under the assumption the market will continue to rise as long as the Fed is giving away money. And I will stick with that theory   until the punch bowl is taken away. There are several ways rising interest rates Will impact the market. Corporations have borrowed cheap money to finance their buy backs. This will have to be refinanced starting in 2017. If interest rates have increased significantly, it would have an impact on their earnings. Also, as interest rates increase, there will be a rotation back into bonds. But the gorilla is all the borrowed liquidity leveraged into the market will be forced out of the market. At the point , there will be a huge correction. Since most projections I've seen day rates will not reach 3% until the end of 2018, I think the market has at least a couple of more years to run barring some big external event. The disaster will  come when the money printing comes home to roost.

[Arkansasbeaux]

The market is always "scary". By saying scary, it implies an emotional thought process. Emotions and the market don't mix. So here's a dose of logic and reality. On average, the market has a dip of 5% about 3.4 times a year; a 10% correction once a year; and a 20% bear market about once every 3.5 years. So, volatility is normal and most people don't realize the Dow was down about 1000 points or so last January. There's only two people that are concerned with the market "crashing". Those that invest emotionally and those that will need the money in a short time. If someone needs the money, then their investments should not be invested in a way where the volatility would affect them in the first place. Investment time horizon is the key.