Mark Hulbert
speaker
68 appearances
1 recordings
1 series
first heard Oct 2017
last heard Oct 2017
Mark Hulbert’s voice in public audio — every appearance, attributed to the second.
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Appearances
That's correct.
In one hand, you might say, you know, it's unremarkable for me to report that the truth is somewhere in the middle.
But in this case, it really is the truth is somewhere in the middle.
Almost everyone will exaggerate.
what the impact of that crash would have for investors today.
Those who think that it'll never happen because of regulatory changes and so forth, like circuit breakers and trading halts and that sort of thing, are kidding themselves.
I can go into why in a minute.
On the other hand, those who think another one's going to happen right away just because the market has been so strong lately are no doubt exaggerating how likely it is for another crash.
But again, the truth is somewhere in the middle.
there is at least some sense in which a big run-up does increase the risk of a decline, but the run-up has to be a lot stronger than what we saw.
So for example, the study that I quote in the column in the journal basically says that you have to have a 100% increase over a two-year period in order for there to be a meaningful increase of a big decline over the subsequent two years.
If you look at that as 100 percent threshold over a 24 month period, we're not even close.
I think the last I've looked, the market over the last two years is up something like 32 percent, give or take.
So we're not even close to the kind of huge run up that at least historically has led to an increased probability of a decline.
Well, that's right.
And that's the reason why we should never kid ourselves that we can ever prevent a crash from happening.
The research that I quote, and this is other research that goes into why crashes happen in the first place.
does point the finger at institutional investors, as you indeed suggested in your question.
It turns out that if institutional investors, for whatever reason, all more, it doesn't have to be all of them, but a good percentage of the institutional investors all want to get out of stocks more or less at the same time,
they will figure out how to get out of stocks, regardless of how many trading halts and circuit breakers and other regulatory changes that we think might protect the market.
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