Market crashes
Every severe decline in market history has something to teach about risk, emotion, and the value of a rule. Below are the big ones, each a completed study in how the 200-day signal navigated it, applied to historical data.
The scorecard
| Crash | Peak → market recovery | Market worst | Strategy worst | Pain avoided | Strategy back at highs |
|---|---|---|---|---|---|
| 1929 Great Crash | Sep 1929 → Feb 1945 | −84% | −26% | 58% | May 1933, market still −66% |
| 1973–74 Bear | Jan 1973 → Dec 1976 | −48% | −16% | 32% | Dec 1974, market still −43% |
| 1987 Black Monday | Aug 1987 → May 1989 | −33% | −16% | 17% | Apr 1989, market still −2% |
| 2000–02 Dot-Com | Mar 2000 → Oct 2006 | −48% | −21% | 27% | Jan 2004, market still −22% |
| 2008 Financial Crisis | Oct 2007 → Aug 2012 | −55% | −15% | 40% | Sep 2009, market still −28% |
| 2020 COVID Crash | Feb 2020 → Aug 2020 | −34% | −15% | 19% | , (V-shaped snap-back) |
| 2022 Rate-Shock Bear | Jan 2022 → Dec 2023 | −24% | −11% | 13% | , (fast recovery) |
Market = S&P 500: SPY with dividends from 2000 onward, and the total-return U.S. market (dividends included) for 1929, 1973, and 1987. Strategy = the published 200-day / ±1% rule per sector: sector ETFs from 2000 on, and reconstructed sector data (Kenneth French daily industries, equal weight within and across sectors) for 1929, 1973, and 1987, with T-bill interest while in cash. The pre-2000 studies use academic portfolios, not tradable funds. “Strategy back at highs” is the first return to its pre-crash starting line. Historical simulation; no guarantee of future results.
Seven studies, one careful method. Each walks through how the strategy's cash signal behaved as the decline unfolded, not as a prediction, but as a mechanical response to trend breakdown, with the chart, the drawdown numbers, and the caveats.
The mania of the 1920s gave way to the deepest decline on record. Sector by sector, the strategy took under a third of the pain and was at new highs by May 1933.
Read the study →An oil embargo, surging inflation, and a 21-month slide. Sector by sector, the strategy stayed within about 5% of its starting line while T-bills paid 7%.
Read the study →The largest single-day percentage drop in history. A bolt from the blue the rule could not dodge, yet it held the damage to about half the market’s and recovered first.
Read the study →Three years unwinding a technology mania. Sector by sector, the rule walked to cash gradually and was at new highs by January 2004.
Read the study →A credit crisis became a market collapse. Sectors began stepping to cash as early as July 2007, financials first, well before the worst of it.
Read the study →The fastest bear market on record, followed by one of the fastest recoveries. Real protection on the way down, with a clear look at what a V-shape costs.
Read the study →Stocks and bonds fell together as rates rose, the rare year a 60/40 portfolio offered little shelter. Cash, for once, paid real money.
Read the study →The point of a rule is to act before the worst of a decline and, just as important, to signal when to step back into the market in a systematic way once the trend repairs itself. No forecast, no emotion. See how the framework works.