I have never heard so much noise about an impending stock market crash.
First you have people with recency bias. The “lost decade” of the 2000’s had not one but two nasty corrections. One was about 56% from peak to bottom and the other was 49%. But corrections of 50% or more are rare. Since 1926 there have only been three! Yet I guess it’s young investors who think that 2008 is the norm, and stocks are supposed to keep going sideways forever.
And then we have the sharks who keep feeding people’s fears in order to sell whatever they have to sell… books, gold, non-traded REIT’s, annuities, market timing services, etc. And in late August 2015 it all came to a tee. This was it! This was the great crash everyone was waiting for!
Lost in all of the panic is the fact that stocks don’t crash until bullishness reaches a frenzy. When EVERYBODY is talking about the stock market crashing and the Fed raising interest rates, that’s when you know that it’s not gonna happen.
As of today stocks have already recovered 8% of that 12% loss. Everyone is scratching their heads, but did anyone tell them that stocks crash 10% or more about once every 11 months? This is business as usual.
And did anyone tell them that historically, after 10% declines in the stock market, only 1 out of 4 times has it dropped 20% or more. We’re still not out of the woods but it looks like the house is gonna win again this time. The bull ride is continuing…
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