Bear markets tend to come with volatility, and the Dow was off -6.9 per cent overnight.
95 per cent of the S&P 500 stocks fell by more than 2 per cent.
There are actually two green stocks in there if you look carefully, but overall it was the beginning of another sharp sell-off.
New speculator entrants
Investing platform Robinhood saw an awesome explosion in user accounts to 13 million in May.
Research shows that many of the new users have been aiming to make a quick buck by investing in bankrupt companies such as Hertz, other stocks facing Chapter 11 bankruptcies, as well as airlines, cruise ship operators, and a raft of sundry businesses which generate zero revenue or profit.
This is the 'greater fool' theory: a gamble that you can hand off the stock to someone else at a higher price before the SHTF, something we saw an awful lot of during the DotCom mania.
142,000 Robinhood accounts were 'invested' in Hertz alone this week (to re-iterate this is a business which is literally bankrupt):
Olympic standard crazy behaviour, and a close echo to 2002 levels of euphoria.
Indeed, Citigroup's panic/euphoria model actually did hit the highest level since 2002 earlier this week.
Noted Citi analysts:
'We're concerned that thoughtful approaches are being overwhelmed by the need to at least keep pace with price moves.
People are ignoring joblessness, trade friction, social unrest, and risks that loom including possible Covid-19 reinfections, the end of bonus supplemental unemployment checks and the upcoming elections.'
Indeed. There's been an awful lot of talk about capital growth over the past year or two, but very little talk about yield.
It's easy to get caught up in the stories, but statistics are much easier to follow.
It's easy to get caught up in the stories, but statistics are much easier to follow.
Here's the CAPE ratio, which is now down to about 28.2:
You can compare this extremely high level to those experienced during previous recessions for a flavour of the risk/reward ratio right now.
