Gravity Bearing Out
The SP500 fell into a bear market and may not stop tumbling until it reaches a level not seen since August 2004, if history is any guide.
A drop in the index of another 12% would match the average retreat of 11 bear markets since 1946.
The SP500 drop has lasted 275 calendar days and wiped out a fifth of its value.
In the 11 previous bear markets, the index has dropped an average of 30.4% over 386 days.
A 46% tumble in financial shares and a 28% decrease in a group of retailers, homebuilders and automakers lead the S&P 500's current decline.
Since December retailers -17% while MBIA, the bond insurer whose credit rating was reduced from AAA, slid the most falling 94%. Hattip to Bloomberg.
The Nattering One muses... if you invested in the SP500 index in December 1998,
in the almost 10 years to date, excluding dividents, your return on investment is ZERO.
In the Nattering one's neck of the woods... If you invested in a $225K home in 1998,
your investment "gain" has rolled back from 2008's lofty $850K levels to 2003 levels of $450K.
Hope you didn't pull out too much on that now frozen HELOC, and stick it in the stock market...
The bright side? your still up 100% on the RE at the moment, but, much like the stock market investment,
home prices will soon roll back to the 1998 level, also yielding a return of ZERO.
Proving that what goes up, must come down. How much further down? We suspect the SP500's ultimate destination is around 800.
This is not going to end pretty.
A drop in the index of another 12% would match the average retreat of 11 bear markets since 1946.
The SP500 drop has lasted 275 calendar days and wiped out a fifth of its value.
In the 11 previous bear markets, the index has dropped an average of 30.4% over 386 days.
A 46% tumble in financial shares and a 28% decrease in a group of retailers, homebuilders and automakers lead the S&P 500's current decline.
Since December retailers -17% while MBIA, the bond insurer whose credit rating was reduced from AAA, slid the most falling 94%. Hattip to Bloomberg.
The Nattering One muses... if you invested in the SP500 index in December 1998,
in the almost 10 years to date, excluding dividents, your return on investment is ZERO.
In the Nattering one's neck of the woods... If you invested in a $225K home in 1998,
your investment "gain" has rolled back from 2008's lofty $850K levels to 2003 levels of $450K.
Hope you didn't pull out too much on that now frozen HELOC, and stick it in the stock market...
The bright side? your still up 100% on the RE at the moment, but, much like the stock market investment,
home prices will soon roll back to the 1998 level, also yielding a return of ZERO.
Proving that what goes up, must come down. How much further down? We suspect the SP500's ultimate destination is around 800.
This is not going to end pretty.
Comments