In a recent post-retirement interview, Warren Buffett said this dip in US stock indices is nothing compared to the Great Financial Crisis (GFC) of 2008/2009. And honestly, he's right. Both the Dow Jones and S&P500 have barely dipped below 10% — technically, that's not even a correction, let alone a crash.
Now, regular readers of this blog know I've been working on a model to take emotions completely out of my investment decisions. And I've updated the model to use 2 anchor dates — one for the Macro, one for the Cycle.
For Macro, I use March 2009 (the GFC bottom) as the floor. For Cycle, I use March 2020 (COVID crash) as the floor. Simply put, the GFC low represents the long-term structural baseline, while the COVID low marks the last major cycle bottom. The model then runs the current stock price against these 2 floors and flags whenever price is testing either level.
So what did the signals tell me? Here's what I found.