11/14/2018 – A down day with the Dow Jones down 206 points (-0.81%) and the Nasdaq down 64 points (-0.90%) 

As we have been saying for some time, the stock market finds itself at an incredibly important juncture. Things are about to move. If you would like to find out what happens next, based on our timing and mathematical work, in both price and time, please Click Here

Here is an interesting thought. Even the very few bulls who acknowledge the possibility of a correction, might be underestimating its true potential. For instance….

Would you be prepared if the Dow Jones Industrial Average were to fall 5,700 points?

To those who have not been investing for a long time, the prospect of the Dow Jones Industrial Average falling 5,700 points in one day may seem ridiculous. But is it?

On Black Monday, 31 years from last Friday, the Dow Jones Industrial AverageDJIA, -0.50% fell about 23%. If the same percentage drop were to happen today, it would be about 5,700 points. I lost millions that day, and so did many others. Of course, today is not 1987.

Some of the most dangerous words in investing are “this time it’s different.” Basic human emotions of greed and fear that drive the markets do not change. Let’s explore this issue with two charts.

And while the author concentrates on a one day crash, the same line of thinking applies on the longer time frame. In other words, BTFD!!!

Allow me to challenge that line of thinking very quickly. 

Shiller’s Adjusted S&P P/E Ratio is about 31.5 today with a mean of 16. For the S&P to reach its mean valuation it would have to fall 50%…..today. And we are not even talking about overshooting to the downside.

But it gets worst. The S&P earnings are at about 120 today. When a recession hits (not if) they will very likely slide to at least 70, if not much worse.

When we combine these two valuation metrics, it is not out of the question for the market to slide 70-80% in order to get back to its mean.

So, instead of trying to figure out what you will do when the Dow corrects 10%, you might start wondering why the hell are you fully invested in arguably the biggest stock market bubble of all time.

The best part is, you don’t have to guess. If you would like to find out what the stock market will do next, in both price and time, please Click Here.