Is it 40% or 50% decline in S&P? David Tice, who runs the $789 million Prudent Bear Fund in Dallas, is more pessimistic. He owns S&P 500 put options because stocks could ``easily'' decline by more than 50 percent in the next 12 months to 24 months. Tice says the latest rebound only delays an inevitable crash, comparing it to when ``somebody falls out of a 95-story building.'' ``They haven't hit the ground yet,'' he said, ``But they're getting closer and closer.'' http://www.bloomberg.com/apps/news?pid=20601109&sid=aouTzYS5mCCY&refer=home
1. the fund sucks. 2. banks have not been that nervous about their balance sheets since august '98. 3. their combined losses account for probably around 15-20bn, which ... 4. ... will ripple through their credit books and hurt smaller companies. 5. yet stocks are near alltime highs while ... 6. ... nonFinancial newspapers write about the credit crisis every day. this is a weird situation.
The dow won't fall 4% for a long time..40% is an impossibility unless there is a nuclear war, impending meterorite impact, gamma ray burst, pandemic, or some other catastrophe.
You forgot to add: 7. the US and the major economic powers are floating in a sea of cash right now. Follow the money. That's what the equity markets do... Now if Big Ben takes away the punch bowl, that should end this party.
20%-30% markdown is considered a correction..multiply 2x in the case of a crisis. Expect no less than 60% discount from all-time highs.
The Tech Wreck was down 78% from the highs... the Depression was down 90%.... Emerging markets routinely give up 90% under conditions like this...