Stock prices are highly sensitive to expectations about the future. When something happens to shift expectations, stock prices basically amplify that effect.
As a practical matter, the dot-com bust and the financial crisis bust were among the worst two stock crises in US history. Only the Great Depression bust was notably worse. Other eras were worse in terms of medium-term real returns, but as much or more because of unexpectedly high inflation as what people usually mean by a stock price crash.
In both of those cases, relevant positive expectations for the future had built up to relatively high levels, and then that era of relatively high expectations ended, and boom . . . stock crash.
OK, so to me, you are de facto asking where it is less likely now that some relevant future expectations will build up like that, and then come back down relatively rapidly.
My answer is no, it doesn't seem less likely to me now that something like that could happen again--or indeed could be in the process of happening now.
As a practical matter, the dot-com bust and the financial crisis bust were among the worst two stock crises in US history. Only the Great Depression bust was notably worse. Other eras were worse in terms of medium-term real returns, but as much or more because of unexpectedly high inflation as what people usually mean by a stock price crash.
In both of those cases, relevant positive expectations for the future had built up to relatively high levels, and then that era of relatively high expectations ended, and boom . . . stock crash.
OK, so to me, you are de facto asking where it is less likely now that some relevant future expectations will build up like that, and then come back down relatively rapidly.
My answer is no, it doesn't seem less likely to me now that something like that could happen again--or indeed could be in the process of happening now.
Statistics: Posted by NiceUnparticularMan — Sun Aug 24, 2025 8:42 am — Replies 7 — Views 387