Plus in the 2008 crash, the Central Banks didn’t start the big save till March 2009, after markets had dropped about 40%. A lot of investors had panicked out before that. Takes some real stomach to hold for 6 months waiting for the calvary to come riding over the hill while your bleeding out.
“Plus in the 2008 crash, the Central Banks didn’t start the big save till March 2009, after markets had dropped about 40%.”
The Fed and US Treasury really weren’t trying to bail out the stock market. They feared a deflationary collapse of the banking system due to the massive amounts of defaulting mortgage paper and derivatives on their books.
The Great Depression was the result of a cascading collapse in the American banking system over the years 1930-1933. Milton Friedman and Anna Schwartz believed that if the 1930s Fed had stepped in to provide liquidity in the early stages then bank collapse and the Depression could have been avoided. Bernanke was a student of Friedman & Schwartz and he implemented their prescription in 2009.
My guess is we will see a 30% drop in markets this fall.
It will not be a flash crash, because FED will not allow it.
But over 3 month period, market drops 25-35%, it will be treated as just a normal correction in a bloated market.