Yes, I knew that the Federal Reserve had blown a massive stock bubble. And yes, I started this blog to bring more attention to the dangers of central bank efforts to create a wealth effect.

Bubble specifics notwithstanding, I can’t say that I anticipated the wealth effect reversing as rapidly as it has. For example, smaller company stocks in the Russell 2000 are down 39% from a high water mark. The price deterioration has wiped away four years of investing in small-cap stocks.

Foreign (ex U.S.) has been even more discouraging for buy-n-hold-n-hope investors. Prices have returned to 2011 levels.

It’s not that I am ignoring the 30%+ losses for U.S. large caps. Rather, I am marveling at the quickness of the decimation.

Volatility itself has been “off the charts. The last six trading sessions? -9%, 5%, -5%, -10%, 9%, -12%. Meanwhile, the VIX Volatility Index is near levels that we haven’t seen since the 2008 financial crisis.

And to think the S&P 500 had hit its all-time high on Feb 19. Not even one month ago.


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