I define stock market crash as a 30-60% (or higher) decline in the Dow Jones Industrial Averages (Dow or DJIA) and S&P 500. I do not consider a decline of under 30% a crash but a correction. A decline of 30-60% in these market indices usually signifies that we are in a bear market in the middle of a U.S. recession. Historically, during a period of expansion, there is a 10% correction every 12 to 18 months and a 20% correction every 18 to 24 months. Historically, a bull market is always ahead of the recovery. A bear market always lags an oncoming recession. To simplify this, a bear market starts when a recession is already in full bloom and that bear market will end before the end of that particular recession.
The stock market will crash, but when? It is my goal to exchange ideas, thoughts and information with my readers on how to get out of equities months before the start of the bear market that follows a recession and to get back into equities shortly before the bull market that starts towards the end of that recession. My readers and I did it once before in 2007 and we will do it again. We will carefully watch economic indicators and the yield curve for hints of an oncoming recession.
So friends and colleagues, let’s enjoy the ride together.