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Opinion
Gary Shilling

Investing for the Next Shock

Some possible shocks to the economy.
Is China "behind the curve" in tackling its shadow banking system? Photographer: Tomohiro Ohsumi/Bloomberg
Is China "behind the curve" in tackling its shadow banking system? Photographer: Tomohiro Ohsumi/Bloomberg

U.S. stocks may be headed for a blow-off as individual investors pile into the market after last year's meteoric increase. Peaks often are reached when everyone has been sucked in. Then, a major shock could force investors to focus on the slow global economy. With U.S. growth of only about 2 percent, it won't take much of a jolt to precipitate another recession, which is long overdue by historical standards.

The investment climate would then shift from "risk on" to "risk off."