Less than one year after we raised our crash flag in April 2019, stocks have entered bear market territory.
The chart below shows our Doom Index levels by quarter. We created the Doom Index in 2017 to sound the alarm ahead of the next crisis. It tracks 11 key indicators to detect when there’s stress in the economy and markets are overheating.
The red bars below indicate a reading of 8 or higher. That’s when we raised our tattered crash flag and told investors it’s time to prepare for a crash.
Since we raised the crash flag last year, the S&P 500 is down 15%. And from the peak set one month ago, the S&P 500 is down 29%.
The crash flag continues to fly high above the Bonner & Partners headquarters, signaling greater downside ahead.
If you haven’t yet, we urge you to revisit your asset allocation strategy. Maintaining a diversified portfolio helps you manage risk during turbulent times, like we are seeing today.
– Houston Molnar
Maria’s Note: Maria Bonventura here, managing editor of the Diary. If you’re a paid-up subscriber of Bill’s monthly newsletter, The Bonner-Denning Letter, you can see his latest asset allocation guide in full here. Bill and coauthor Dan Denning break down the five asset classes that belong in every investor’s portfolio today… what percentage to devote to each… and why.
If you don’t have a subscription to The Bonner-Denning Letter yet, read on here. Dan explains why it’s not too late to protect, and even grow, your wealth in the bigger crisis he and Bill see coming.