Last February, Shervin Pishevar, one of the most respected figures in tech venture capital, made a series of predictions about the future of the U.S. stock market. Tweeting to his nearly 100,000 followers, Shervin Pishevar said that the markets would likely experience one of their worst years in a decade. He also predicted that volatility would return to the markets, wreaking havoc with some of the new index funds, particularly those that invested in volatility.
Shervin Pishevar said 200-day moving averages will be reset downwards
One of the key metrics that investors use to judge the long-term health of equity and other markets is the 200-day moving average. For the last 10 years, the markets have more or less tracked inside their 200-day moving averages, yielding remarkably stable returns to investors.
But Shervin Pishevar was one of the first to go against the crowd and predict that, for the first time in nearly a decade, the Dow Jones would be trading below its 200-day moving average. This prediction has turned out to be prophetic. The Dow Jones has, indeed, been trading significantly below its 200-day moving average since the beginning of October. Increasingly, investors are worried that the departures from recent historic norms may signal a fundamental shift in the mood of investors and the future of what has amounted to one of the longest-running bull markets in the history of the country.
Happy Thanksgiving! A classic from Anthony Lewis that is more relevant than event to our times.
Abroad at Home; Thanks And Giving by the late Anthony Lewis https://t.co/khzYxLGO17
— Shervin Pishevar (@shervin) November 22, 2018
But many investors still don’t want to listen to the rest of Shervin Pishevar’s opinions. The majority of what the inveterate financier has said is not particularly optimistic. And he has specifically predicted that the Dow Jones may give up all of the gains that it made in 2018 and most of what it gained throughout 2017.
By this point, however, Pishevar’s incredible track record of getting very specific predictions about the future course of markets right means that investors, no matter how bullish, should be listening to his financial opinions. Listening a little more to reasoned voices like Shervin Pishevar versus self-interested figures like Janet Yellen may be the best thing that America could do to right its financial ship.