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    History Indicates Stocks Set To Drop In Half

    Analyst Eric Hickman warns market is "lulled into complacency"
    by Adam Taggart

    Friday, May 7, 2021, 9:40 AM

Money manager Eric Hickman is a number-cruncher who’s also a student of history. 

And looking at the past 100 years of market data, he’s forced to conclude that the stock market is due for a whopper of a correction — one that could happen at any moment…

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Over the past century, the market has had 8 “good” and “bad” cycles, all of them roughly equal in duration. The cycle we’re currently in is the rosiest “good” cycle on record – and it’s looking very long in tooth.

Hickman observes that each good cycle ends with the investing public going “all in” on stocks. It definitely appears we are at that stage now.

And he warns that the opposite is true of bad cycles. By their end, investors have sworn off ever owning stocks again.

Looking at what it would take to make today’s markets ‘fairly valued’ by historic norms, the S&P would need to drop in half. Which he warns is quite likely at this point.

Which is why Eric agrees that, now more than ever, it’s important to partner with a financial advisor who understands the nature of the market risks in play as well as the opportunities, can craft an appropriate portfolio strategy for you given your needs, and apply sound risk management protection where appropriate:

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10 Comments

  • Fri, May 07, 2021 - 12:42pm

    #1
    TWalker5

    TWalker5

    Status: Silver Member

    Joined: Mar 13 2020

    Posts: 199

    5

    Wolf!

    This thesis makes sense.  But I’ve been hearing it, or something like it, over and over again for the past decade. During said decade the market has soared. When I hear these warnings now, I feel like one of the townspeople from the old fable about the boy who cried wolf. Someday there likely really be a wolf but the days of me grabbing a pitchfork and running out to defend the flock are long gone.

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  • Fri, May 07, 2021 - 4:31pm

    acesovereggs

    acesovereggs

    Status: Bronze Member

    Joined: Aug 22 2018

    Posts: 58

    0

    acesovereggs said:

    Indeed, same feelings here.  Been hearing it for 12 years now.

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  • Sat, May 08, 2021 - 12:04pm

    catherder

    catherder

    Status: Member

    Joined: Nov 17 2010

    Posts: 19

    7

    catherder said:

    I agree with the first two commenters. I got out of stocks in 2011 based on my reading of this site. I don't even want to think about how the upcoming last third of my life might have been different had I not done so -- it's just too painful to contemplate. The only thing that helps is my impression that international travel is really gone for good at this point.

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  • Sat, May 08, 2021 - 3:57pm

    #4

    Montana Native

    Status: Bronze Member

    Joined: Mar 17 2009

    Posts: 184

    1

    Markets never crash

    Like the commenters above, I've lost some capital by being out of the markets in 401k since 25K on the Dow and postponing large investment there until I had a homestead polished up. Was hoping for a Covid draw down in the Dow to around 16 to 18k to jump back in and missed out. Still have lots of AU and AG along with a crypto portfolio where I removed my initial investment and capital gains after going up 300% in 6 months. Is this going to be a crack up boom or will the market tank? Hell if I know. If it weren't for crypto, my ammo would likely be my best investment in the last decade. Still buying silver and silver stocks though....that has to moon one of these days. It seems to be one of the most affordable things out there considering historic value and a myriad of uses.

     

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  • Sun, May 09, 2021 - 8:43am

    #5

    JAG

    Status: Platinum Member

    Joined: Oct 26 2008

    Posts: 818

    2

    Why I am a market doomer.

    Not only did I not make money in this decade-long bull market, but I actually lost money betting against the market about two months ago.

    That's right, I'm dumber than the "dumb money".

    But here is the reason why I will not succumb to the herd mentality in the markets and jump onboard the bull train with everyone else: The "when" is just as important as the "how much" when it comes to making money in the markets.

    If you make money with the market herd, your relative purchasing power actually decreases over time. But, if you are making money when the herd is losing money in the markets, then your relative purchasing power goes exponential.

    At the same time that everything in the financial and consumer markets becomes cheaper, your buying power is increasing. Speaking from experience, having cash and actually making money when everyone else is panic selling, makes the years of sitting out more than worth it.

    And if a market dump ever morphs into an economic depression, betting against the crowd might just keep you from starving.

    What sucks about this current bull market is WallStreet's ridiculous speculation in Lumber. I've got stuff to build and I'm getting tired of waiting on lumber prices to crash. Have you seen a chart of lumber futures?

    I hate WallStreet.

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  • Mon, May 10, 2021 - 5:53pm

    #6
    dreinmund

    dreinmund

    Status: Silver Member

    Joined: Mar 19 2011

    Posts: 272

    0

    dreinmund said:

    I’m beginning to think there might not be a big drop before we get an epic crack-up boom blow off top. Stock market going exponential for a while.

    But one way or another, if the stock market doesn’t drop, the purchasing power will erode to compensate. Some sort of “deflation” is coming, even if it means inflating money leading to “deflating” standards of living.

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  • Wed, May 12, 2021 - 10:49am

    #7
    PhilH

    PhilH

    Status: Bronze Member

    Joined: May 24 2010

    Posts: 199

    0

    Will it crash?

    I'm inclined to believe a drop more than 1/2.  I did a study a few years ago where I drew a line based on market highs and a separate line on market lows.  Big corrections always fell to the market low line.  What's missing in all of this, never fight the Fed, and they are still monetizing borrowed money.  At some point, this is going to come unglued.  I think it will happen when China finally admits they have more gold that US Treasury.

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  • Thu, May 13, 2021 - 6:25pm

    #8

    tgreimann

    Status: Member

    Joined: Dec 07 2016

    Posts: 3

    0

    I have been a member of PP for 7 years on and off..

    Was bearish for some time then got smart. Market will sell off eventually,  and did with COVID.  Inflation eventually yes, but in the meantime enjoy good returns while hedging with SPX Bear Put Spreads. A really good financial advisor will show you how.. Or plenty of information online. Read up and get smart. Do incorporate Gold/Silver in your portfolio as well, but don't go overboard.  Cheers!

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  • Mon, May 17, 2021 - 11:49am

    #9
    Russellnop

    Russellnop

    Status: Member

    Joined: Feb 14 2021

    Posts: 3

    0

    Russellnop said:

    Interesting observations, now we can expect big changes within a few months.

     

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  • Tue, Aug 03, 2021 - 8:30am

    #10
    KastGrin

    KastGrin

    Status: Member

    Joined: Aug 02 2021

    Posts: 1

    0

    KastGrin said:

    Reasonable offers, Jhon. You should think very carefully. Trading is an excellent extra job. In the beginning, you should choose those companies that will be comfortable for you, and it's not complex. For example, my trading career began with Robinhood. Now I am using some alternatives. You should find your strategies and the app where you will feel the most comfortable. That is why I recommend you try to find some other apps that are alternatives to Robinhood. On these apps, all is more stable, and it's easy to understand if it is worth investing in.

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