Fed's decisions could incite the next market crash

The stock market has seen a strong recovery since it nearly plunged into bear market territory at the end of last year. Experts attribute this renewed strength to the Federal Reserve's decision to postpone any further rate hikes for the foreseeable future.

John Hussmann, an investor and a former economics professor who has been predicting a stock collapse , does not believe that. He explains why the current conditions remind him of the situation right before the last two crashes of the market.

His main argument is that the Fed's monetary easing practices have created unsustainable market conditions. By lowering interest rates to near zero, the central bank made it easy for companies, even those with questionable credit profiles, to have an easy access to debt financing.

In the past monetary easing was comparatively ineffective during the periods right before last two financial crises.

The nearly 10-year bull market has withstood loads of other negative obstacles in last few years. But Hussman says it's quite an important development, and that investors would be unwise to ignore these conditions. In fact, the environment right now reminds Hussman of the periods preceding the last two catastrophic stock sell-offs.

Тhe more evidence Hussman unearths around the stock market's unsustainable conditions, the more worried investors should get. Sure, there may still be returns to be realized in this market cycle, but at some point the growing risk of a crash could become too unbearable. That's a question investors should have to answer themselves. And one that Hussman will keep exploring at the same time.

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