There’s so much talk these days in the crypto and financial spaces about recession, inflation, and incoming crashes. Any talk of a serious financial crash immediately recounts memories of stock brokers angrily walking out of office buildings back in 2008 when I interned in the financial district across the street from the NY Stock Exchange. So, I decided to compare price action in 2008 to price action today and here’s what came out.

The Similarities

Use the arrows to move the slider left and right to compare 2022 (in white background) to 2008 (in grey background).

S&P 500 Index
Nasdaq 100 Index

Both the S&P and Nasdaq Indices printed, at minimum, 4 peaks in price before a waterfall drop creating significantly lower lows. The S&P 500 was able to test resistance a 5th time before its capitulation.

The Differences

The only saving grace this time around is that circumstances are different. 2008 was the culmination of an over-levered banking system nearly invisible to the masses whereas conditions today are very much in everyone’s faces. Higher consumer prices fueled by inflationary stimulus checks and lockdowns temporarily alleviated some of the economic hardships in 2020; however, people are feeling the effects of these ignorant political and economic policies today at the gas pump and at the grocery store.

How Miserable Are You?

Nonetheless, the striking similarities in price structures between 2008 and today should be worrying as history tends to repeat itself. Market failures usually result in an increase of the misery index (which is the unemployment rate plus the inflation rate). To me, this is a good indicator of “the times” and how bad the economy actually is. The misery index for 2021 is at about the same level it was in 2009/2010, which could be an indicator that things are about to get a hell of a lot worse.

Important to note the inflation to unemployment ratio between 2021 and 2008 is almost the same, except inflation is worse this time.

FYI

Here are the S&P 500 and Nasdaq charts for larger viewing:

S&P 500 Index (2008 Global Financial Crisis)
S&P 500 Index (COVID Lockdowns & Inflation)
Nasdaq 100 Index (2008 Global Financial Crisis)
Nasdaq 100 Index (COVID Lockdowns & Inflation)

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The Rebel Economist
Author: The Rebel Economist

Civil Engineer // Aviator // Photographer // Avid Coffee Enthusiast // Your investment strategies could differ from mine based on your risk tolerances, research, and time horizon, so I encourage you to do your own research as information provided by The Rebel Economist or Breaking Metrics should never be considered financial advice.

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