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Thanks for sharing this chart! Treasurekidd provided this attached chart in another thread, and I thought it would be good to post it in this thread.
Those highlighted areas capture the duration of the downturn only, not the time to return to prior high. Wanted to point out that distinction because if you measured the time it took to return to the prior high it would be longer.
I posted this S&P 500 historic chart in another forum. This was taken ending at the beginning of 2022.
If history is an indicator, I'll use the example of the run-up in the 90s, then the "crash" in 2000 to see when it recovered.
If you take the 2000 high, you'd see the S&P didn't come back until year 2008 but only briefly. So effectively it did not fully recover to the 2000 level until the year 2013. So effectively it took 13 years to recover. The QQQ took even longer.
Now the question is how low will the S&P go?
If you look at the run-up on S&P since 2020, there is no support level until you get back to the March 2020 dip, so a realistic support level says S&P will be at 3,000, that's a 20% drop from today. The next support level is even lower at 2,000.
Another theory is that all the liquidity the Fed has been pumping into the market since 2008 needed to be taken out before the market hits the bottom. That's a lot of liquidity going from QE to a QT !
From 1/1/00-1/1/13 spy was up 22% reinvesting dividends qqq was down 24% over that time
I posted this S&P 500 historic chart in another forum. This was taken ending at the beginning of 2022.
If history is an indicator, I'll use the example of the run-up in the 90s, then the "crash" in 2000 to see when it recovered.
If you take the 2000 high, you'd see the S&P didn't come back until year 2008 but only briefly. So effectively it did not fully recover to the 2000 level until the year 2013. So effectively it took 13 years to recover. The QQQ took even longer.
Now the question is how low will the S&P go?
If you look at the run-up on S&P since 2020, there is no support level until you get back to the March 2020 dip, so a realistic support level says S&P will be at 3,000, that's a 20% drop from today. The next support level is even lower at 2,000.
Another theory is that all the liquidity the Fed has been pumping into the market since 2008 needed to be taken out before the market hits the bottom. That's a lot of liquidity going from QE to a QT !
Your last two sentences is very apt.
Keep in mind that excess is $9 trillion.
The Fed has pledged to remove $1 trillion per year from the economy. So if anyone thinks we can have another bull market with the Fed withdrawing $1 trillion per year from the economy, they are very, very optomistic. That number exceeds the damage caused by the annual effect of our current record inflation.
SO when you think about ALL THE LIQUIDITY BEING REMOVED through QT, high interest rates, and inflation, there is very little economic drive to catapult the markets.
There will be bear market reallies along the way down for those who choose to exit at high points along the way- it is NEVER straight down.
We are a very long, long way from capitulation by investors. Many have not even opened thier second quarter reports to see the first part of the damage.
Those highlighted areas capture the duration of the downturn only, not the time to return to prior high. Wanted to point out that distinction because if you measured the time it took to return to the prior high it would be longer.
This chart shows that information, again provided by treasurekidd in another thread.
This chart shows that information, again provided by treasurekidd in another thread.
Yep. So the average was just under 2.5 years. It’s why I answered 3+ years. I think this one takes a bit longer than average to hit that new high again. Probably sometime in 2026 if I had to take a wild guess.
Yep. So the average was just under 2.5 years. It’s why I answered 3+ years. I think this one takes a bit longer than average to hit that new high again. Probably sometime in 2026 if I had to take a wild guess.
Hmm, so a 2-3 year buying opportunity? Excellent! If we get a 2-3 year bear market, and hit new highs in 3-5 years, I just may be retiring early!
I’m already retired. That scenario is far from what I had expected and planned for. I’ll live, but man have my hopes/dreams been upended.
I feel your pain, but this too shall pass. The main thing is to stick to the plan - fine tune and make adjustments of course, but stick to the plan. The main thing I keep asking myself is "what do I want my portfolio to look like going IN to the next bull market?"
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