How to prepare for a market crash

The US stockmarket has hit new highs – which most people think is good news. But don’t get out the champagne just yet, says Paul Hill…

The US economy is the largest in the world: it's worth some $13.5trn. Its nearest rival, Japan, is worth a mere $4.4trn. It follows, then, that the health of the US stockmarket is central to that of global markets. When America is doing well, so is everywhere else and, as the adage goes, when Wall Street sneezes the rest of the world catches a cold. Given this, it was considered by most to be very good news when the S&P 500 and Dow Jones hit fresh all-time highs two weeks ago and this after a two-year bull rally.

I'm not so sure. The excesses of the global economy are making me nervous. In the UK, property is simply unaffordable, except for the lucky few; City bonuses are astronomical; and takeover speculation is rife, with banks even financing deals on loss-making terms. It feels like a peak rather than the middle of a bull run. Calling the top of the market has generally proved a mug's game, so I'm usually reluctant to attempt it. But right now, the odds of the market coming a cropper are so high that all investors should take note of the signs.

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Paul gained a degree in electrical engineering and went on to qualify as a chartered management accountant. He has extensive corporate finance and investment experience and is a member of the Securities Institute.

Over the past 16 years Paul has held top-level financial management and M&A roles for blue-chip companies such as O2, GKN and Unilever. He is now director of his own capital investment and consultancy firm, PMH Capital Limited.

Paul is an expert at analysing companies in new, fast-growing markets, and is an extremely shrewd stock-picker.