Distinction between business-cycle positioning and financial-cycle exposure
The 1991 example is a sharp illustration: credit losses around 8.5% of average lending versus roughly 2.5% during the GFC tells you that the severity of the event had far more to do with balance-sheet structure than with where the economy sat in a conventional cycle.
What it means for your portfolio
"What has to keep working for these assets to retain their value?" It reframes the whole exercise, because it forces you to name the hidden dependencies rather than just label the asset class.
Does this apply to your holdings?
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The dot-com crash
The tech-heavy Nasdaq fell roughly 75-80% peak-to-trough in the 2000-2002 dot-com bust, and took around 15 years to reclaim its 2000 high.
The global financial crisis
The S&P 500 fell about 57% peak-to-trough during the 2007-2009 global financial crisis.
The COVID crash and snapback
The S&P 500 fell about 34% in roughly five weeks in Feb-Mar 2020, then recovered its prior high within about six months.
General information only, not financial advice. Historical figures are approximate and provided for education.