In an overbullish, overbought, overvalued market, fund manager John Hussman offers the following commentary about what typically happens after the final peak is made:
“In general, the initial decline from these peaks tends to occur as a sharp 6-10% market drop over a handful of weeks, typically followed by a partial recovery attempt toward the prior peak. This sort of activity both before and after major peaks gives the market the impression of near-term ‘resilience’ that dilutes the resolve even of investors who know the history of these things.”
A similar pattern was found in 1929, 1972, 1987, 2000 and 2007.
