Stability is the Problem

The one aspect of this bear market that is misunderstood: stability was the problem. The market right now is in a mild bear market. Most bear markets aren't mild, they eventually get worse. Time-wise, the bear market is moving slowly, which suggests a larger magnitude bear move. The economy is holding up well, credit risk still hasn't broken out yet. People want to blame the Federal Reserve and they do deserve blame for pouring gasoline on the bubble. They deserve blame for quantiative easing because they suppressed volatility for more than a decade. Yet they didn't shut down the global economy and spend trillions as a response.

All of which is to say, there's no way this was going to end well. The Federal Reserve's rate hikes are arguably having very little effect on the markets and in hindsight, will merely be a symptom rather than a cause. Suppressing volatility is like adding dry wood to a forest floor year after year, while preventing all forest fires. Eventually, all it takes is a spark for a forest-killing fire. The governments of the world started helicopter dropping gasoline in 2020. Western governments and China haven't stopped.