Whenever markets reach all time highs commentators begin bleating about the coming crash. This hysteria is then amplified whenever there is a pullback of any sort. No doubt last night’s slippage in the NASDAQ 100 set many hearts a flutter. However, what these commentators fail to realise is that markets don’t suddenly hit an all time high and then immediately drop 25%. In all instances of true market crashes the market peaked often weeks before real slide began.
Below are four charts looking at four of the biggest moves in the Dow – you will notice that the market peak was well before the crash and you had plenty of time to take action.
These charts are important because one of the most severe impediments new market participants have is their nervousness about crashes and this nervousness is not helped by the constant chatter of commentators who know nothing about the markets history.
