I was hoping for a more in depth answer. Like in the case of: 1: The bear market of 2000-2002, where earnings could no longer sustain stock prices. 2: or the Crisis of 2008-2009 where subprime mortgage bonds took down world economies. What specific event (or events) "this time," will be the catalyst for a Bear Market?
to put in a different way the stupidity of the bond buyers, or the investment crowd in general... 1 hand they are pointing fingers at the stock market and go 'ha - financial engineering'... most of them are empty handed and have been kicking themselves for years for missing the rally of life time; on the other hand they buy bonds - the exact reason 'financial engineering' is possible for companies to cancel shares and pick up the huge spread for free. 3 years ago when I put up the thread 'are we gonna run out of shares', QQQ was at 105 and the 10 year vs. the equity earning spread was about the same as today.... 80 QQQ points later the spread is still that big. the real question is - what are you gonna do about it.
Well, that's the point. In order to get sustained order flow in one direction for a protracted period of time - it requires a severe fundamental paradigm change that wasn't largely foreseen in the previous trend. If it's a soft recession you'll see fading earnings reports over a broad front for multiple quarters. In 1990 it took severely elevated oil prices stemming from the Iraq War. Currently the United States is by far and away the largest oil producer in the world. The dot com bubble was difficult to short prior - stock valuations wouldn't allow someone to hold a short and survive the capital drawdowns. It's easy enough to believe that a market is irrational and a bubble, but can you survive the capital draws required to ride out your timing? Likewise with the housing and financial crisis of 2008. Unless we have a "gentle landing" recession signaled by corporate earnings fading over a period of a few quarters - it takes a rather severe shock to the system to turn around momentum for a sustained and protracted period of time.
if you use 2000 as example then you probably didn't experience it lol... back then at the peak the 10 year was at 5.7% and the sp earning yield was at 1.x%.... today the yield situation is almost exactly the opposite... in order for the 2000 over valuation to occur, sp needs to be at like 15000 something. yes that's how absurd 2000 was... and that's how absurd today IS as well. forget about bear market... people are scared, they are kicking themselves for missing this huge bull market, but they are too scared to jump in... and that is good! you want to jump in before the other people! by the time everyone is convinced there is no more risk in the market, that would be the definition of THE TOP!
Your assumptions and premises are flawed. I remember a poster called "Nitro" invented some model that told him to short the S&P at various levels; can't remember the exact numbers but at one point the S&P was at 13xx and his model said it was worth 900. That is what happens when your assumptions and criteria are crap and you lean heavily on them in how you invest your money.
https://ei.com/economists-ink/speci...e-current-financial-crisis-by-jeffry-l-davis/ Basically, musical chairs.
Need a good story? Looking for reasons that due to X, we'll absolutely get more Y? Call up your local Morgan or Goldman office and ask for a Broker. They always have a good story. Much like the media. Gotta have a good story to move shitty product. Not trying to be a total smart-arse but... Years ago (Spring 1992) I was with some friends who were Metals Traders at the old COMEX...in the old World Trade Center and Paul T. Jones comes in to shoot the shit since his offices were just upstairs and he was still a local there. He started talking about all kinds of things, Macro stuff...and I was drinking it all in from this Market Wizard. He eventually got around to what all those Metals Pits Animals wanted to know...when should they load the boat with Gold...and other precious metals to a lesser extent. He said anytime/every time the Fed goes into an easing cycle you want to be as long as you can get in the 'Barbarous Relic' for 12-18 mos. Further, you want to be long AF equities!! I listened closely and stored those nuggets away for future use. Then as my career progressed I never forgot PTJ's words that day. It worked in '93, '95, '98, '01, '08. And it's likely to work yet again. I know it doesn't fit a lot of the common narratives going around these days with regard to Gold & Equities...but, we're likely run far higher, and far longer than most people think we will. Take it for what it's worth. G/L