Market corrections often follow a belief that traditional rules no longer apply
History shows that some of the most painful market corrections have been preceded by a familiar belief: the idea that traditional rules no longer apply.
Investors often become convinced that a new technological breakthrough has permanently changed the market landscape, only to discover that valuation discipline still matters.
One notable example is the technology boom of the late 1990s and early 2000s, where investors argued that the internet would transform the global economy, but many assumed traditional valuation measures no longer mattered.
The result was a prolonged market downturn that erased a substantial portion of investor wealth when the bubble burst.