' Dotcom Bust

Dotcom bust

The recent stock market turmoil may be just a correction or it may be the start of a larger decline. In favour of a mere correction is the (apparently) healthy state of the global economy. In favour of a larger decline there is the coming unwinding of QE and likely increase in inflation and interest rates.

The chart shows how the dot-comn bust unfolded. It took two years to reach the low point, there were lots of "up" days (green dots). The right hand tail of the crash looks less fearsome - still between May 2001 and November 2002 the NASDAQ lost 37% of its value. From the top to the bottom the loss was 78% - just about the same as the Great Depression.

Data from https://fred.stlouisfed.org/series/NASDAQCOM

Peter Mott
February 2018