The Stock Market Richter Scale, or ...

... The Bear Lumbers In!

The Question is When?

The Answer is, “Holy Crap, He’s on the Doorstep!?!

About 2 years ago, I was cruising my regular haunts (in this case, John Hussman, of Hussman Funds and former professor of Economics and International Finance) for some idea on when we might see a Bear correction in the market. I came across this article, Why Market Valuations are Not Justified by Low Interest Rates – Oct. 9, 2017.

I promptly distilled it for Teresa, who inevitably asks me: What does it all mean!?! From that was born: The Stock Market Richter Scale™.

Bear (haha…pun intended!) in mind, this is overly abridged and reduced like a fine sauce at a 5-star restaurant.

Let’s give the 1987 Crash an arbitrary value of 1 (as shown in the graphic).

By that measure, the notorious ‘Tech Bubble’ racks up a 1.25 on our SMRS™ (Stock Market Richter Scale).

The Great Recession Crash, otherwise known as the 2007 market meltdown rates a 2.0 on the SMRS™. The coming, ‘Literally Off The Charts Crash’, as predicted in the Hussman article could rate a whopping 3.0 on the SMRS™.

And then Teresa said, “That’s nice. What does that mean?”

Takeaway: The market always goes through these cycles. Always. No matter what anyone says. And the best defence is to Prepare for the Bear.

Want to understand more about Bears and Bulls and all the Sh*t in between? Want to know why we are not panicking (and even a little giddy) in this market mayhem?

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