Stock Market Crashes

SpaceX: am I a buyer? How it compares to my only ‘1,000 bagger’

As SpaceX is priced at crazy multiples of profits, dividends, cash flows and assets, and based on outlandish growth assumptions, it is not an ‘investment’ but a speculative bet. I would look at it only as a potential ‘10-bagger’ or ‘100-bagger’ (bought with ‘play money’, not serious money I or my family will be relying on in future). Here is my summary of how SpaceX compares to my only 1,000-bagger, FMG bought in 2003. The problem is that SpaceX fails 7 out of the 9 tests (3 to 9). Bottom line = If I were to buy SpaceX, I may ride the current FOMO boom a little higher, but it will fall heavily when (not if) the current boom ends. Unless Musk can grow profits to $1 trillion or so per year. Anything is possible, I guess! TIMING is just as important as PRICING – and both are lousy for SpaceX.

1973-4 Oil Crisis - Fact Check: impacts on inflation, interest rates, shares, FX, gold. Then-v-Now?

With the recent spike in oil prices there are a lot of myths about the 1973-4 oil shock causing the 1970s inflation, and also triggering the 1973-4 share market crashes. Here are the facts about what actually happened to shares, bonds, interest rates, exchange rates, oil, gold, and inflation before, during and after the 1973-4 crisis. SHARE MARKETS actually ROSE during the Yom Kippur War, OPEC production cuts and embargoes. The oil price spike was only part of a much larger 1973-4 share market crash where there were several other causes. INFLATION was already running at 7.4% in US and 10.1% in Australia BEFORE the crisis. Oil prices certainly added to inflation, but was not a primary cause. I outline many SIMILARITIES and DIFFERENCES between the 1973-4 crisis and today’s conditions.

The Myth of rising Oil prices being bad for Share markets

Most years of RISING oil prices (even severe oil price spikes like 1979) were GOOD years for shares. Out of all four segments on the chart, the sector with the most years by far is the upper right segment ‘B’ which was when oil prices and shares were both UP. Many of the BEST years for Australian shares were when oil prices were RISING including 1978, 1979, 1985, 1989,  1995, 1996, 1999,  2003, 2004, 2005, 2007, 2009, 2013,  2019, and 2021. Conversely, some of the WORST years for shares were when oil prices were also FALLING (segment ‘C’ ), but these had little to do with oil - like 1930 (Great Depression) and 2008 (GFC). At most, oil prices have been a relatively minor contributing factor in share boom-bu

Impact of 31 wars & crises on share markets: mostly quick recoveries and ABOVE-average returns!

Three-quarters of the major wars and military flare-ups in the past century were accompanied by rising share markets (including the BIG ones in WW2). Each crisis is different of course, but wars generally create surges in demand and spending, flowing through to company profits and share prices, but also higher inflation. But even with higher inflation, in most cases the military crises triggered surges or rebounds in share markets. The initial shocks caused mostly sharp but short sell-offs, but two-thirds recovered within three months, and three-quarters were ahead by 12 months. More than half of cases, both US and Aussie share markets posted better than historical average returns from pre-crisis levels (and even higher from the crisis lows).

126 reasons NOT to invest! ‘This time is different’ – or is it?

It’s that time of year again – time to review threats and risks that might blow up our investments in the coming year. In the past we have had wars (including ‘World Wars’), revolutions, recessions, depressions, inflation spikes, deflation, pandemics, political crises, nuclear strikes, etc. They may have been devastating for human life and whole economic systems, but you would have trouble spotting their impacts on the chart. For 2026, we have Trump’s threats against Canada, Greenland, military actions in LatAm and Iran, ICE waging war on US soil, escalating US deficit/debts, Trump’s new Fed chair hired to cut rates, ‘ai’ destroying jobs, industries, and even destroying the ‘ai’ bubble itself!  All scary stuff! Given the ‘uncertainty’ and expensive pricing, is it NOW time to sell up and wait for things to 'settle down' and become

Visual snapshot of 60+ share markets over 35 years. 2025 = third year into broad global boom

2025 was the third straight year of good returns on most share markets. Although the US had another above-average year, most other countries did even better than the US in 2025, busting the common myth that this is a narrow US-led boom. Australia lagged the US by a big margin again for a third year running. I outline the reasons why. Three-year booms are not unusual. There have been plenty of examples of longer booms before a bust. The higher and longer the boom, the deeper and longer the bust. The US is beating Australia in the current boom, but will suffer worse in the bust to follow. Pricing is currently very expensive – not just US tech stocks but everywhere including and especially Australia. Share markets do not collapse because or when they become expensive. Over-priced booms can keep running

100 years of boom-bust cycles on the US share market – where are we now?

This is the US version of my recent story on 100 years of boom-bust cycles on the Australian share market. It is clear that the current US boom has been rather LOW, MILD and SHORT compared to most prior US booms. The US has had virtually the same boom-bust cycles as Australia because the ASX follows US cycles very closely. But the extent of booms and busts varies based on "who's turn is it to have the bigger boom and bust". In the current tech/ai boom the US is leading, but the bust will also be bigger. It is not a question of pricing or valuations. Booms don't end because or when markets are over-priced. Over-priced booms can run up for many years before the final trigger for the bust.

How long and how high can the current boom go? 100 years of boom-bust cycles on the ASX

We all know we’re in a share market boom, but are we at the start, or the middle, or near the end? Here I put the current boom in context by looking at every boom-bust cycle on the Australian share market over the past 100 years. The pace of the current boom is actually quite moderate (although the US boom has been much stronger). There have been plenty of past booms that went a lot longer and a lot higher than the current boom. The longer and higher the boom, the deeper the bust, and the longer the recovery time. It’s not about pricing or valuations. Booms don’t end because or when markets become over-priced, or when reach a certain level of over-pricing. Over-priced booms can run on for many years. What ends booms is a trigger or series of triggers.

Whitlam, Nixon, the 1973-4 crash, and how the 1970s inflation crisis changed the world

The 1973-4 share market crashes in Australia and the US featured major political crises – Nixon/Watergate in the US and the Whitlam dismissal in Australia. But the main causes of the crashes were the battle against inflation, started in the mid-1960s but worsened under Nixon and Whitlam. The 1970s inflation crisis triggered three seismic policy shifts: 1) monetary policy; 2) central bank independence / inflation targeting; and 3) the shift to a whole new economic orthodoxy which delivered four decades of declining inflation and interest rates, plus high returns. That post-1970s golden era of declining inflation & interest rates, globalisation, free-trade and hands-off government are over. Now we are into a new era – with the return of inflation, big government, protectionism. Today we have several similarities with the 1970s. <

1987 Crash Part 3: How it shaped my investment philosophy

How I ended up on the right side of both the mid-1980s share market boom and the October 1987 crash. How I came across and put to work the 4 Rules that work in all market cycles. How the real world is the exact opposite of what academic finance theory teaches. How one-off extreme ‘outlier’ events like the 1987 crash are ignored by finance theory, but they are what define our lives, and determine our future wealth. This is the story of my experiences before, during, and after the Crash

1987 Crash Part 2: what happened, why was it much worse in Australia, and what is similar today?

For the US stock market, the October 1987 crash featured its largest ever one-day fall, but it turned out to be a relatively minor hiccup. The US market started rebounding the next day and recovered its pre-crash high in less than two years. But in Australia the crash was much deeper (-50%) and took more than eight years to recover. Although most of the problems and trigger events were in the US, I provide ten reasons why the Australian crash was much worse than the US. The current US tech boom has several similar underlying conditions as in 1987 - over-pricing, speculative fever, inflation, mounting government deficits & debts, trade & current account deficits, falling US dollar, trade/currency wars. However the trigger for the correction is different in every crash, and may be years away. Meanwhile it pays to be vigilant.&

‘Price/Earnings’ ratios are meaningless – Exhibit A: the 1987 crash

The 1987 crash was a prime example of how the most widely used measure of pricing for shares and share markets – the ‘price/earnings’ ratio - can give investors a false sense of security, and fail to warn of massive levels of hidden over-pricing. At the top of the market before the 1987 crash the Australian share market had a lower (cheaper) p/e ratio than the US, but our crash turned out to be much sharper & deeper, and took 5 times as long to recover.  The low p/e ratios for companies, and for the whole market, masked enormous underlying problems because much of the reported 'profits' were due to accounting trickery, fudged valuations, related-party deals, circular transactions, and straight-out fraud.  It is the same in every boom - and we are seeing increasing evidence of this in the current ai/ data centre / private credit boom.

Half-time 2025: Good start for 80% of share markets. Defying tariffs, turmoil, tiresome predictions

In first half of 2025 - 80% of world share markets are up, and 57% are up by more than 10%.   A good start to another good year despite a constant chorus of wrong predictions of imminent recessions and corrections by economists and ‘expert’ commentators.    It’s been a broad global rally, NOT just ‘US big-tech’ lifting the world. Can the rally continue? There have been plenty of longer rallies in the past!

'Time-in-the-Market' -v- 'Timing the Market'. Which is better? US share market outcomes

Share market returns over all holding periods - even up to 10, 20, and 30 years - are little more than a coin toss. 'Time in the Market' only works if you get the Timing right, which is mostly luck. Finance textbooks and retirement calculators are based on nice, smooth, theoretical curves that assume constant 'median' returns over long periods. But in the real world, only ONE person in the population gets the median. Half will get MORE (sometimes a lot more), and half will get LESS (sometimes a lot less). There have been decade+ periods of zero or even negative real returns. By the time you realise you're in the unlucky wrong half, it may be too late to adjust your strategy.

US Shares: ambitious multiples on ambitious accelerating profit outlooks. But powering on regardless

In the March qtr reporting season, S&P500 companies posted good earnings growth of +13% for the past 12 months, after decent +9% growth in the prior 12 months.  Consensus forecasts for the next two years have been cut over the past month (tariff impact fears) but they are still forecasting an acceleration of earnings to +15% growth in calendar 2025, plus a further +15% growth in 2026. That's still incredibly ambitious! Current pricing is also a very bullish 28 times trailing earnings, and 25 times the next year's forecast earnings. These are very optimistic multiples on very optimistic accelerating earnings outlooks - a double layer of over-confidence - and highly vulnerable to negative shocks.  But investors have shrugged off Trump's tariffs, negative GDP, and Moody's credit downgrade. So far so good!

US shares 'CAPE' ratio update after the fall - Still vastly over-priced, but not a timing indicator

Even after the recent price falls, the 'CAPE' ratio for the US share market is still a very high 33.6, indicating the market is still around 100% over-priced relative to underlying real earnings. Only a fall of around -50% (like the 2000-2 tech-wreck, or the 2008-9 GFC) would bring the US market back to 'fair' pricing on this measure. But CAPE is a pricing measure, not a timing tool. In prior cycles, the market has kept running higher for many years before finally crashing - eg in the 1920s and 1990s. The high CAPE means high vulnerability and sensitivity to negative shocks. The current environment is producing a few of those!

Is the US dollar in decline? or on its ‘last legs’? Hardly! The problem is the dollar is too strong

The US dollar is hardly in decline or on its last legs. The main problem is that it's too strong - demand exceeds supply.  The biggest enemy of US producers and exporters is not China. The chief culprits are Japan, Europe, and UK, as they have trashed their currencies to help their exporters, far more than China has. Trump needs to bring down the dollar, but can he do it without crashing stock markets and sending bond yields higher?  What are the implications for Aussie investors?

‘Buying the dip?’ – ‘Catching Knives’ or ‘Bagging Bargains’? – the Aussie share market experience

Following my story on US market dips, here is the same analysis for the ASX: The Aussie market has had 36 dips of -10% or more since 1920.  Buying the dips still resulted in more 'Knives' than 'Bargains', and below average returns overall, but the outcomes were significantly better than buying the dips in the US market. 83% of dips on our market were led by falls on the US market. Of the few dips that were due to local factors alone, most were 'Bargains'. Where are we now? Will I be buying the dip here as the US boom deflates?  

After the mini-correction, should I ‘Buy the dip?’ - Am I ‘Catching Knives’ or ‘Bagging Bargains’?

The US stock market has had 31 'dips' of -10% or more since 1900. We look at what happened in each case if you 'bought the dip'. In most cases, a 10% dip turned out to be just the start of a much larger fall (further -15% fall on average), and for a much longer period (more than a year of further falls on average). Overall, buying the dip resulted in poor returns over subsequent 1, 3, and 5-year periods, but there were several times when 'buying the dip' led to high returns. Where are we now? How does today's market compare?

ASX down 8 days in a row - Ouch! Do sustained down-runs point to a market correction?

Runs of 8 straight down days are not that uncommon. In fact they occur about 50% more frequently than they statistically should if the market was 'random'.  Long runs of down days were much more common in the 1950s, 1960s, and 1970s. The market has been much smoother (less susceptible to sustained negative sentiment) in recent decades.  Some long down runs were at the start of major corrections, some were in the middle, and some were at the end. But almost all long down runs on the ASX were part of a major market correction.

Bring on the Trump ‘volatility’! - My Volatility Spike Index separates the calm from the storm

Trump's first term was certainly entertaining, but was it volatile for financial markets? Let's look at facts, not mindless media chatter warning of  'more Trump volatility!', or 'another bumby ride!'. My Volatility Spike Index highlights and compares all volatility spikes since 1970.  

125 reasons NOT to invest! ‘This time is different’ – or is it?

It's that time of year again - time to review a whole new year of possible threats, risks, and crises that might blow up share markets.  What are the big risks that might spook investors in 2025? How share markets power through even the greatest crises the world has ever faced. 

2020s decade half-time score – US shares: great so far, but expect a decade of pain when boom ends

At the half-way mark for the decade, US shares are doing well above average. The current speculative boom is similar to the 1920s and 1990s - but they were both followed by a decade of NEGATIVE total returns in the 1930s and 2000s when the booms collapsed.  Markets don't crash because or when they're expensive. The current boom may run on for years yet. 

We're half-way through the 2020s decade! Here's the half-time score check on Aussie shares

The decade half-time score check for the Aussie share market is not that good: Aussie shares are having a below-average decade so far (and below other markets eg the US). It has been below average all decade – after a poor start with the 2020 Covid lockdowns. But all is not lost – some past decades also started out slow but ended up with good full decade returns. There is plenty of time left this decade for the next big speculative boom to lift the share market – history is on our side!    

World War II & share markets – Part 2 of 2: Through to the end of the War and aftermath

Key points: Australian and US share markets did well overall, despite heavy loss of life and attacks on our home soil. Volatile ride for shareholders, but patient holders ahead. Generally good for shares overall, limited only by war-time controls on profits and share prices.  

World War II & share markets – Part 1 of 2: the Outbreak

War is scary, so it is tempting for investors to panic and race for the exits.  It's important to look beyond the media headlines - knee-jerk, herd-following reactions are usually wrong.  Usually positive for commodities demand, prices, mining shares.

‘Worst’ days on the ASX? (" . . . THAT’s a knife!”)

After my story on Monday pointing out that the -3.8% fall on the ASX was relatively minor and there have been dozens of worse days on the ASX - many people asked me what those 'big' down days  were, so here they are. What were the really bad days on the Australian share market? What caused them? How do they compare to the worst days on Wall Street? Are share markets really 'random' like finance theory claims?  

BIG days on Australian share market – but how bad was it?

Today was the worst day on the local Australian share market for 4 years. But how bad was it really? What should investors do about it? Is it time to panic sell? How markets are not random like finance textbooks suggest How these are the times that make or break investors  

Margin Lending boom-bust signal of share market over-confidence - Not flashing red yet

  I have never used or recommended margin lending, but margin lending volumes are a great barometer of boom-bust cycles. Where are we now in the cycle? Are we near the top of the market?

Not all world share markets are hitting new highs. Here are the Pretty Good, the Bad, and the Ugly

Most world share markets are hitting new highs this year, but some are not Here they are - the Pretty Good, the Bad, and the Ugly How does your country rate?