As so often is the case, history provides some valuable perspective and possible lessons. I’ve been advising clients over 36 years and have lived through two of the worst bear markets ever and two of the biggest bull markets ever. I find it interesting that scars from bad experiences seem to leave deeper marks on our psyche than positive ones. Maybe this is why so many repeatedly make the mistake of thinking the next bear market will be like the last one – which has not been the case so far since the S&P 500 data started. Since the US market bottomed after the 2008 financial crisis, an ever-growing crowd of “market prognosticators” has warned at any sign of even the slightest trouble that 2008 doomsday is around the corner. Since 2009 there have been warnings of the next crash.
Two famous sayings come to my mind: “even a broken clock is right twice a day” and “history doesn’t repeat itself, but it often rhymes”.
Remember in 2010 there was a 16% correction market intraday lows. During the Euro debt crisis of 2011 meltdown S&P 500 lost roughly 17% and there were numerous headlines saying then it could be worse than 2008 crisis. Recall the 2013 bond selloff (a.k.a. taper tantrum) when bond traders panicked from Ben Bernanke’s speech that “the Fed was going to stop buying bonds since the US was stronger now.” In that Market Update, I said: “analysts were misreading Mr. Bernanke’s message and acting like he was going to sell bonds rather than just stop buying them.” The month-long double-digit selloff in 2014 produced headlines asking if it was the start of next ’08 like crash were daily in the financial press. Jump to Q1 2016, when US stocks again sold off fast and furiously during the first 5 weeks of the year after 2015 Dec. rate hike of 0.25% saw double digit declines fearing the fed was going to raise rates 4 times, yet only did 1x in December of 0.25%. During Q4 2018, the S&P 500 dropped 19.7% from its peak. Post Covid we saw a 25% decline in 2022. All of these I mention dropped on fear not necessarily on fundamental data. Each of them had their own overriding flavor but all of them shared 3 fears: rising inflation, interest rate changes and geopolitical tension. Sound familiar? Fear of the future drove the crowd and could not be calmed by positive data nor analysts’ comments. Georgetown University Finance Professor, Reena Aggarwal called it a crisis of confidence. In hindsight each time, it was an emotional overreaction.
Too much of a good thing, a victim of its own success, glut, overkill.
These are all phrases that make me think of the stock market in 2025, especially Nvidia and the past two years plus of its published growth. It’s human nature to acclimate; even more so we get bored from repetition. I mean I love Sugar Cream Pie, I consider myself an unofficial ambassador for it. But even me, after I eat a piece or two each day for several days, can’t eat any more of it for a while; not just because of my raised blood pressure, but even I start to grow tired of it. Well, the day after Nvidia released their earnings in Nov. that’s how the market seemed to me: too much sugar cream pie for too long. Nvidia has made it seem normal to release record-breaking earnings so much so that the markets seemed to have become bored, even though it was one of the greatest quarterly earnings reports and forecast updates I have ever come across. It, along with many tech stocks made a big reversal from pre-market gains to high single-digit percentage losses by the end of the day. I know one day does not make a trend, but a reversal often signals a short-term point of inflection. CFRA Research Chief Strategist Sam Stovall wrote that day, “Since the bear market of 2022, the S&P 500 has endured two corrections. However following the bears of 1948, 1973, 1990 and 2007, the S&P 500 weathered from 3 to 5 corrections before finally surrendering to a new bear market. So even if this decline is merely in its infancy, investors should remember that digestions of prior gains are common within the life span of a bull market.” This basically means that markets, no matter how good they are, don’t go straight up. I view the current race for energy to power the seemingly insatiable demands of self-driving cars, plant automation, AI models and machines (and possibly soon personal robots) similar to the infrastructure buildout opportunity after World War II with the rebuilding of Europe and Japan in particular. In the US alone, the proposed project buildouts that have been announced amount to roughly building 20 Denvers or Seattles. That can be many years, not months or a couple of quarters, but many years of opportunity. I think this is a fact that too many are missing. Spending projections for 2026 from the largest technology companies that provide cloud and data services generally increased from 2025 levels. When sell-offs come, regardless of the size and depth, it can be worrying. This is why I want to remind you of what I wrote in my Update ‘Miles and Miles and Miles’ believing a profit taking was likely: “So when the next big sell-off comes (a sale), remember this idea of so many proposed data-center projects to shop during the sale. I don’t know the future, but I can see “miles and miles and miles” of proposed spending ahead. “
Remember, panic sells set the stage for big rallies. If you’ve been reading my Updates you know I’ve been trying to prepare folks for a real correction. During a sale you can find great bargains. I have made my career out of this. If you don’t have confidence in your approach to the markets, then contact us for a no obligation review and plan design. I’ve seen the stock markets make many dreams come true, and we love working with clients to chase theirs.
The S&P 500 Index is a widely recognized index including a representative sample of 500 leading companies in leading sectors of the U.S. economy. Indexes are unmanaged. Investors cannot invest directly into indexes. Past performance does not guarantee future results. All historical market data referenced above was obtained from S&P Global (www.spglobal.com)
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