Living Through a Crash

My colleague Michael Batnick wrote a great post yesterday discussing how bear markets typically wipe out years’ worth of gains. (Before anyone leaps to an unfounded conclusion, the title of this post refers to the 2000-02 crash, and not the current weakness). Given the rough start to the new year of trading, it might be worthwhile to delve deeper into various crash scenarios for those of you who have not lived through the unwind of a bubble.

Understanding that intellectually is easy, but truly grokking the forces at work on people’s psyches during a crash is not. It is similar to warfare: perhaps you can imagine what it’s like, but only those who have lived through it truly understand the intensity and magnitude of the experience.

Batnick used the Dow as his example due to its long history. My frame of reference is the Nasdaq-100, traded as the QQQs.

Keep reading this article on Barry Ritholtz - The Big Picture.

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