We have been busy running models on XHB and someone wondered what an XHB crash would look like if we modeled it after the 2006 crash. We thought it was an interesting idea so we took the data and drew the graph.
The ‘What if’ question here is what if we took the 2006 to 2009 XHB crash and “copied” that data set over to 2021? We took the data and adjusted it to make it fit the current valuations and the results surprised even us. There is a remarkable parallel to what happened in 2006 to what is happening in 2021. Will the model hold moving forward? Only time will tell.
The 2006 model has XHB bottom out around Sept 17 2023 if it follows the exact previous pattern. We would urge caution though because in 2006, the Federal Reserve was LOWERING interest rates while the Fed is expected to RAISE rates at their next meeting in September 2022. The Fed raising rates will distort the market which is why we still are projecting a bottoming out around January 2024 but anything is possible.
We will update this graph periodically and see how the ‘What If’ forecast fits. In the meantime stay tuned and stay solvent…