Self-described “economic justice campaigner” Prof Richard Murphy is again warning that the end is nigh. “Financial markets across the world are flashing red,” he declares.
That sounds hyperbolic, given the S&P 500’s relatively modest 5 per cent fall, but no matter. A crash is coming, and “not next year, not in theory, but now”.
To reinforce the sense of urgency, he says “almost everybody” in the financial press agrees with him. He even cites an unnamed FT columnist (“a man of obvious wealth from the way in which he writes”) apparently predicting a 40 per cent drop while still keeping half his wealth in equities – an apparent contradiction Murphy finds “baffling”.
The recent market dip leaves Murphy feeling “sort of vindicated”. Really?
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In December 2017 he warned “there is a bubble” that would “soon” burst. In November 2018, he dismissed strong equity returns as “pretty much an urban myth”. In January 2021, he was “not convinced a crash can be avoided”, calling valuations “incredible”.
Including dividends, the S&P 500 has nearly tripled since December 2017 and is up 90 per cent since early 2021. Investors who heeded such warnings might feel less “vindicated”.
A former adviser to Jeremy Corbyn, Murphy’s background is in tax and accounting, not portfolio management, but his certainty is striking. For someone regularly appalled by market optimism, he remains remarkably optimistic about one thing: that the crash he has predicted since 2017 will finally arrive.
It may. Markets do fall, and stocks look expensive. However, forecasting a crash every year and declaring victory after a 5 per cent pullback is like predicting rain in Ireland and celebrating when a cloud appears. No one – not brokers, not analysts, not financial journalists and certainly not Richard Murphy – can reliably call market tops and bottoms.
If markets teach anything, it’s that a little humility outperforms certainty in the long run.
