I did some basic number crunching to try and find patterns in the previous major market crashes. Below are some initial thoughts. Will see if I can develop on this theme further.
THOUGHTS
- Both the previous big falls have been 50%+.
- The falls were multi-stage. ie. markets fell 30%-ish for 4 times during the dotcom crash and thrice during the GFC.
- During the GFC, the last leg of the fall was the sharpest, falling 45% in 2.6 months. This is when people already knew the extent of the problem.
- Strong pullback rallies punctuated each leg of the fall.
- Going by the last 2 falls, the 50% mark is roughly 6000 and 60% mark is 5000.
- Each phase of the fall and rise comprised of about 2 months. Going by history, we could be looking at a pullback rally for the next 1-2 months.
- During the dotcom crash, the market fell consistently for nearly 20 months, and during the GFC it fell for 10 months (top to bottom).
- The extent and speed of the current fall could mean that we could be heading for a sharp but short cycle of fall which can last less than 1 year.
Post initially put in Market Meltdown, the Virus, and our Actionables - #183. Adding here for future reference and record.