A ton of people saw the financial crisis coming, but I’m not sure there were very many people who predicted the extent of the global sell off. Unfortunately, the pain has been so great that there are now only a few previous bear markets (in the last 100 years) that we can compare the current bear with. The 00-02 Nasdaq, the post 1989 Nikkei, and the post 1929 Dow.
I was thinking about this today after seeing another comparison chart and I remembered a post that I made back in January 08. In it I talked about how Larry Pesavento declared that the coming bear market would be the worst in the last 15 years, including the Nasdaq bear of 00-02. I linked The Big Picture and got a comment from Barry Ritholtz, who was very surprised by the dire prediction. I must admit that I scoffed at Pesavento’s prediction and was quite confident that we would not see the depths that we’ve seen this year.
Well here we are and the sad truth is, I don’t think anyone would be surprised to see the markets challenge a peak-to-trough decline of 78%. We aren’t there yet, but it is in the cards.
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