I suspect a lot of people on this sub have never lived through a real crash or serious bear market. As such, they expect that these markets just take us down to fair value, but that's almost never true. If a market can be 20% too frothy when sentiment is high, it can end up 20% undervalued when sentiment is in the dumps.
This is why returns coming out of crashes are so great, and it's why trying to pick the bottom based on typical fair value assumptions isn't likely to work. The bottom is as irrational as the top was.
I'm not making any prediction about this specific market — that's a fool's errand. I do think we have a real economy threat unlike any we've seen in recent years (aside from the early days of Covid), and I think we'd all agree that there was a lot of excess in markets of late. Whether that results in a recession-driven crash or just a bit of a prolonged bear market, I don't know. But the potential is there for both scenarios, and the more disastrous of the two could mean a lot of suffering in markets with price levels getting so low that everything seems stupid and you wonder if the market is just forever broken.
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