Learning From 5 Markets Cycles & The Crashes That Ended Them

14 abr 2020

To put into perspective what could happen in the current market climate is always helpful to study historical market behavior.

For this analysis, I am using Gann Boxes a great drawing tool from TradingView.

Although each market cycle is different in duration, boom and bust, they share common characteristics.

The ability to be unpredictable, erratic and wipe out wealth.

Another trait they all share is the ushering in of a new era of wealth building.

Only the new era that we face may be built on deflation, significantly weakened currencies and potentially a new world order. Additionally, in the west, the distribution of wealth is very seriously skewed toward the super-rich. Things will need to change.

Anatomy of wealth creation and destruction.
• The 60s and 70s ended with an 80% loss of gains accumulated.
• The 80s ended with Black Monday which wipes out 38% of gains (relatively mild)
• The Dotcom Bust wiped out 60% of gains
• The Financial Crisis wiped out 100% + of gains

So far, the Corona Crash has been relatively mild, thanks to massive government intervention, with currently 25% of gains lost.

The question you must ask yourself is:

Is this the end of the crash? Is the retracement of the market commensurate with the actual economic activity & jobs market collapse?

Just be clear all options are on the table, including a retracement to Zero, for the S&P this is close to 700 points.
No one knows the future and we humans are notoriously bad at predictions.

What do you think?