It will definitely crash again. A roughly 50% peak-to-trough market crash is a near certainty. But nobody knows when. That includes the people who got it right last time.

We see the same pattern repeat with smart, successful investors. A forecaster called 2008. Another warned about the dot-com boom. Someone posted the right chart before the COVID drop. The conclusion feels rational: find the predictor with a track record, follow their next call, and sidestep the next major loss.

The evidence for that hope is thin. In fact, the data suggests that acting on "expert" warnings is often more expensive than the crash itself.

One Great Call Is Not a Repeatable Skill

Markets produce a steady stream of predictions. A few will be right simply by the laws of probability. That does not mean the predictor found an edge they can use again.

Over two decades, researcher Philip Tetlock tracked 28,000 expert forecasts. He found most experts added little value compared to simple statistical models. Some performed worse than random chance. The headline was memorable; the point was serious: confidence and credentials do not create forecasting skill.¹

We remember the winners, forget the losers, and call the lucky ones "visionaries." This is survivorship bias. The challenge isn't the forecaster's intelligence. It's that repeatable market-timing skill is rare, hard to measure, and easily confused with a single lucky outcome.

The High Cost of "Smart" Warnings

Bubble talk usually starts with an accurate observation: valuations are high, narratives are loud, and investors are underpricing risk. The leap of faith comes next:"Therefore, you must sell now."

This is where the math gets brutal. "Early" looks exactly like "Wrong" in your portfolio.

Consider three famous examples of brilliant investors who spotted risks, but whose timing would have cost you a fortune:

1. Michael Burry: The "Sell" Tweet (2023)Michael Burry famously nailed 2008. On January 31, 2023, he posted a single word to Twitter:"Sell."(He later admitted, "I was wrong to say sell.")

• What happened next:If you listened to the "Big Short" legend and went to cash, you sat out a market that delivered+26.3%in 2023,+25.0%in 2024, and+17.9%in 2025.

• The Cost:That is an+86% cumulative returnmissed in just three years. On a $100,000 portfolio, following that one tweet cost you roughly$70,000in growth comparing cash at ~5% annually to staying invested in the market.

2. John Hussman: "A Textbook Pre-Crash Bubble" (2013)In November 2013, Hussman warned that the market showed "textbook pre-crash bubble" signals similar to 1929 and 2000. And recall Hussman had perfectly nailed the dot-com crash before, so people expected he could do it again. The logic was sound, but the timing was disastrous.

• What happened next:From 2014 through 2025, the S&P 500 produced a+359% cumulative total return.

• The Cost:A $100,000 investment grew to nearly$460,000during this "bubble." Sitting in cash earning 3% would have left you with only ~$142,000. You would have missed over$300,000of wealth waiting for the "correction." And would you be back in the market now?

3. Jeremy Grantham: "Fully-fledged Epic Bubble" (2021)In January 2021, Grantham (who predicted both the dot-com crash and the GFC crash) declared the bull market a "fully-fledged epic bubble" that would burst in due time.

• What happened next:The market returned+28.7%that very year. By the end of 2025, the cumulative return was roughly+96%.

• The Cost:Even with decent interest rates on cash, avoiding this "epic bubble" cost an investor roughly$80,000of missed growth on a $100,000 portfolio.

These three case studies show how even when the diagnosis is thoughtful and the analysis is from someone with good prior calls, there are no certainties. On top of that, in addition to requiring you to get the sell timing right, you also have to figure out how to buy back in near the bottom.

Why Bubbles Are Hard to Trade

Bubbles look obvious in hindsight. In the moment, investors face three difficult problems:

1. Valuation is not a timing signal.High valuations can imply lower long-run expected returns, but they tell you nothing about next month. Markets can grind higher on momentum and optimism far longer than disciplined investors expect.

2. Crashes need a catalyst.Expensive markets do not fall just because they are expensive. Something has to change. Predicting the specific catalyst is harder than pointing at a valuation chart.

3. The bottom arrives before the good news.In both 2009 and 2020, markets hit their low point while headlines were still terrible. Investors waiting for "clarity" missed the turn. The result is a classic whipsaw: selling after fear rises, and buying back only after the recovery is already priced in.

What We Do Instead: The ArcVest Approach

Our approach is direct:Passive investing. Active coaching.We focus on what we can control and refuse to pay for what we cannot.

• Buy the Haystack.Stop hunting for needles. A diversified, low-cost, rules-based portfolio is designed to capture returns without requiring a successful bubble call.

• Global Diversification.Concentration feels comfortable when U.S. markets lead, but it creates a single-country bet. We spread exposure across different economies to mitigate the risk of any single bubble bursting.

• Automated Rebalancing.Rebalancing forces you to trim what has run up and add to what has fallen. It is a disciplined, automatic response to volatility - buying low and selling high without the emotional baggage.

• Stop Feeding the "Fee Extraction Machine."A 1% annual fee sounds small, but over 30 years it can consume 25 - 30% of your potential market gains. That drag hurts you regardless of what the market does.

The Real Risk Is Your Own Behavior

One bad market year rarely destroys wealth. Poor decisions made under pressure often do.

Morningstar’s "Mind the Gap" research consistently finds a "behavior gap" between the returns funds report and the returns investors actually earn. Why? Because investors chase performance and flee after losses.²

This is whereActive Coachingearns its keep. Vanguard’s "Advisor's Alpha" framework suggests that behavioral coaching - helping you stick to the plan when the news is scary - can be the single largest component of an advisor's value, potentially worth up to 1.5% per year in net returns.³

A Practical Framework for Bubble Talk

When the next "everything is about to crash" narrative arrives, use this checklist:

• What is this money for?If you need the cash in two years, it shouldn't be in stocks anyway. If it's for 20 years from now, a temporary drop is irrelevant.

• Do I have a written rebalancing policy?Without one, every decision is an improvisation under stress.

• Am I paying for planning or predictions?Pay for discipline and implementation. Do not pay for crystal balls.

Crashes will happen. The date will surprise almost everyone. But you need a portfolio and a process that can withstand uncertainty, rather than a prediction that tries to dodge it.

Buy the haystack, keep costs low, and build a defense against the decisions that feel urgent but age badly.

Sources

1. Philip E. Tetlock,Expert Political Judgment: How Good Is It? How Can We Know?(Princeton University Press, 2005).

2. Morningstar, "Mind the Gap" series.

3. Vanguard, "Advisor's Alpha" / "Putting a Value on Your Value."

ArcVest is a fee-only fiduciary registered investment advisor. This article is for informational purposes and reflects our investment philosophy. It is not personalized investment advice. Investing involves risk, including loss of principal.