New Model Incorporating Valuation, Momentum, and Macro Factors Helps Predict Stock Market Crashes

Equity markets experience booms and busts, testing investor discipline. Larger drawdowns are more likely during recessions but can happen anytime.

Research shows credit growth, price momentum, and valuation ratios help predict market crashes. New model incorporates macro, technical, and valuation factors.

Model shows high likelihood of crashes before 1973, 2000, 2007. Valuation most significant predictor across markets.

U.S. drawdown increases other countries' crash risk. Country factors beyond U.S. still relevant.

Expensive markets indicate lower returns and higher crash risk. Consider international, small-value stocks to mitigate risks.