How Stock Market Could Tank
Indian Economy & Market|February 2022
IT is said that bull markets don’t die of old age, which explains why this market keeps chugging along despite being more than twice as old as the average rally.
Paul J. Lim
How Stock Market Could Tank

But if that’s true, what do bull markets die of? Up until a few years ago, many investors thought this bull would be gored by the same force that weighed on the global economy in the aftermath of the financial crisis: deflation.

Deflation is that rare circumstance in which the economy can’t seem to gain any traction, and prices and sentiment keep slipping. “That’s the type of market we saw in the 1930s, when there was a total loss of confidence,” says James Stack, a market historian. Conventional wisdom says the bull ends in one of these three predictable ways.

Scenario #1: The Economy Did It

“Bull markets don’t die of old age, they die of fright,” says Sam Stovall, author of The Seven Rules of Wall Street. And what bull markets fear most isn’t the shock of war or political crisis, but recessions.

This story is from the February 2022 edition of Indian Economy & Market.

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This story is from the February 2022 edition of Indian Economy & Market.

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