And like in '08-'09, there will be those who are foolish to sell off everything.
Ebb and flow, that's the market. It's not for the faint of heart either. So if you do sell off, remember I'll be there buying it when it is near the bottom, just like I did in 09.
If you sold off late 2007 or very early 2008, you avoided a 50% drawdown. The market didn't get back to breakeven until 5 years later. People knew the real-estate market was completely nuts by late 2007, but only some people knew how gigantically insane the mortgage and derivatives market was. So, there was an inkling to get out for all, but a strong warning only to experts. So, not the strongest of warnings for the average person, I grant you.
In 2000, the warning was there for everyone, as the .com bubble was enormously clear. For people who sold off in 2000, they avoided a 50% drawdown on the S&P 500 and an 80% drawdown on the Nasdaq. It took the S&P seven years to get back to that level, and then it promptly crashed again and took another 5 years to get back to that level. The Nasdaq only now is about where it was in 2000 -- 15 years later.
Today, in my opinion, we have very clear warnings. We have had:
-- the unprecedented 7 years of interest rates at zero,
-- trillions of dollars in free money,
-- crazy charts of monetary base,
-- crazy amounts of reserves at the Fed,
-- crazy Fed balance sheet,
-- much larger debt than at the peak of 2008,
-- enormously more money in derivatives than at the peak of 2008,
-- housing prices that are nearing their peaks of 2008,
-- Shiller PE/Tobin's Q that (prior to the last 3 days) at the 4th highest mark in history (the other three being just prior to gigantic crashes),
-- historically gigantic levels of margin debt in the US and China,
-- Bank of Japan printing money to buy the bonds issued by Japan, monetizing their debt,
-- China building ghost cities,
-- periods of negative interest rates across large swaths of European government debt,
-- horrible percent of Americans fully employed (and we have it great compared to young people in Europe).
Additionally, in recent weeks:
-- Greece is finally in its end game of default,
-- Puerto Rico has defaulted on its debt,
-- Commodities (especially oil and copper) are crashing,
-- China's absurdly valued stock market has finally started its crash, which can't even be stopped by the totalitarian power of the Chinese government making shorting illegal, ordering many institutions to buy stocks at any value, arresting speculators here and there, stopping trading on half or more of their stocks, pouring trillions of renminbi into the purchase of stocks.
Today, the US market has had a day where stocks such as JP Morgan Chase, CVS, Home Depot, Verizon, and many others gapped down 20% (!) at the beginning of the day before climbing up to only a several-percent loss.
I understand the buy-and-hold argument. I understand that timing is usually difficult. I understand that I could be wrong -- but to me things seem very ominous right now.
