There have been more than 70 occasions since the bull market began nearly 13 years ago when investors could have been spooked out of many of their stock positions or scared out of the market entirely by any number of frightening narratives.
Every one of those times, detailed in the chart below, were opportunities to buy stocks. That’s according to Dr. Ed Yardeni, President of Yardeni Research, to which we subscribe and sometimes publish excerpts of his work including this piece of research.
Yardeni hasn’t yet said whether he believes the current turmoil in the market is another panic attack but chances are this current concern about rising interest rates hurting stocks will pass.
Do we hear 72?
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by Ed Yardeni
How many panic attacks are likely to occur in 2022? I’ve kept a log of these events during the current bull market that started in 2009.
So far, there have been 71 panic attacks by my count as shown in the table below. These are my subjective picks. A few of them have triggered full-fledged corrections, when the S&P 500 fell 10%-20%.
Most have caused minor selloffs, but were accompanied with lots of fear that they might lead to bear markets. All of them turned out to be buying opportunities.
In my book, PREDICTING THE MARKETS (2018), I observed that most bear markets were caused by recessions, which were caused by credit crunches.
It’s hard to imagine a credit crunch even if the Fed raises the federal funds rate all the way up to 0.75% this year, as is widely expected.
I doubt that there will be a panic attack once the Fed stops buying bonds after March and starts raising the federal funds rate by 25bps two or three times this year.
That’s because everyone expects this to happen; it won’t be a surprise.
The most obvious nasty surprise would be another COVID variant that is immune to available vaccines.
That would undoubtedly exacerbate supply disruptions and cause inflation to move higher and to be persistent for longer. The Fed might have no choice but to turn more hawkish.
There are a few geopolitical shocks in the list below. They could occur again over Taiwan and Ukraine. Push could come to shove between Israel and Iran.
As long as none of these cause a recession, they are unlikely to cause a bear market in 2022.
But they certainly could trigger more panic attacks, which would be buying opportunities.
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