What prompted us to write this post was the highly unusual timing and ferocity of the decline in late 2018. We were wondering whether there were any comparable historical precedents – and lo and behold, there is one. When the boom of the 1920s entered its final stretch, the stock market did something very similar: it fell quite rapidly and precipitously at the end of 1928 and recovered just as quickly. It then went on to make new highs in 1929. Alas, as is well known, this happy state of affairs did not last very long. It was rudely interrupted by a crash that was ultimately followed by the most severe bear market in history.
