| It's when a major fund(s), bank(s) or lender(s) blows up and is followed up a successive string of failures until the "big one". Every financial crisis or recession from the last 30 years or so has had a string of failures leading up a crash. Late 1980s S&L Crash - You had a string of larger S&Ls failing (and a ton of smaller ones). This was a contributing factor in the 1990 recession. Note that S&Ls started failing in the mid 1980s. 2000 Crash - Long Term Capital Management blew up in 1998 and had to be rescued due to fears of contagion. Note the market hit all time highs after this fund failed. 2008 Crash - In early 2007 - New Century blows up ... starting a cascading series of failures. The S&P hits new highs throughout 2007 after New Century, until it finally starts to crash in late 2007 leading into the 2008 recession. And now we have Archegos, which failed earlier this year and new highs in the stock market this week. I am watching for more failures. One of the major contributing factors to Archegos' failure was WAY too much leverage. There is a ton of money sloshing around the system right now, and margin debt has hitting all time highs. Crypto is also going blow up and take a lot of retail with it. If you get a stock crash and folks get margin called you could see a lot of crypto selling to cover that margin. |