This monthly chart represent the S&P 100. Will history repeat itself ? I don't know, but as an Investor or trader , you should always look at the big picture. Based on this chart , one might want to reduce or have very little market exposure. Good trading to you all
If you look at the last decline as a wipe-out of sentiment, then that likely set up an over-sold situation that wont be retested again anytime soon (as in the next 10 years). Most likely people are under-invested in equities and over-invested in bonds. Bonds have 30 trillion or more in assets while stocks have less than 15 trillion and historically there is likely less risk in stocks given how low rates are. Have you looked at the charts at http://www.nowandfutures.com ? They have some excellent graphs of the market after inflation that also indicate that we are likely closer to a bottom of this 12 year bear market (exceed 75% decline in real stock market prices).
I wouldn't look at it that way. In 2008 it was deleveraging financial institutions and the collapse of equity in financial institutions due to real estate deleveraging and falling real estate prices. Also in 2008 it was sky high energy prices feeding through the system at the same time as higher state and local real estate taxes. In 2000, it was also far more than the internet bubble collapse, it was the collapse of insane valuations in a handful of global brand valuations and the shift in capital flows from stocks to real estate from Clinton's passing of the 1997 zero capital gains on real estate profits (up to $500,000 a year for joint filers). I don't want to appear too fringe on these topics, but there really are so many variables that are going on outside of general discussion in the media. There are meaningful trends going on in demographics that will shape our stock market returns going forward also. Our corporate profit margins in the US are as strong as ever and are in the highest decile of our last 100 year history. Our inflation rate is arguably higher than reported and our Government spending is out of control, so these factors are offsetting each other. Either way - I hope we can just continue to find low risk, high return trades without having to be RIGHT on the big picture. The big picture is side-ways for another decade, based on demographic trends. Essentially the spenders born in 1958-1964 are the end of the big wave of boomers and 46-49 year olds are the biggest spenders, so you can see that 2010-2013 is the very end of a massive spending wave from US births. The 2007 top was essentially the end of that boom in real estate also. It will never regain the peak values, ever, since birth rates plummeted in 1965 and have never recovered. So, we muddle along sideways.