Minutes after Barefoot Investor’s warning, the ASX plummets and billions are wiped off the stock market.

Stocks only temporarily fell during the start of the Covid epidemic more than two years ago, and Australian investors haven’t suffered a protracted stock market drop associated with poor credit circumstances since 2008.

However, after another strong inflation data in the US raised new concerns about rate hikes, the Australian Securities Exchange fell 2.75 percent in the first few minutes of trading on Wednesday, wiping away $66 billion.

‘We are well overdue for a stock market crash,’ Pape said.

‘They happen, after all, on average every 10 years, and the last one (discounting the Covid-induced flash-crash) was 14 years ago.’

The last significant, protracted stock market decline in Australia occurred during the GFC.

Prior to a protracted stretch of daily declines that started in early 2008, the benchmark S&P/ASX200 index of the Australian Securities Exchange reached a high point of 6828.7 points on November 1, 2007.

Lehman Brothers, a 161-year-old American financial services giant, collapsed in September of that year as a result of the American sub-prime mortgage market crisis, making the GFC the worst global economic crisis since the Great Depression of the 1930s.

The Australian stock market fell 53.8% by March 6, 2009, from its high in 2007 to 3145.5 points, and it took another ten years to break the previous record.

According to Pape, people who are close to retiring are most traumatized by the financial post-traumatic stress disorder of the GFC.

‘I still have PTSD from the GFC,’ he said.

‘People on the verge of retirement wrote to me in tears as they watched the value of their super dissolve in front of their eyes.

‘They had no idea how much risk their super fund was taking … until the market crashed.’

The Australian Securities Exchange had a bad start on Wednesday morning, with the benchmark S&P/ASX200 plunging by 2.75 per cent to 6,817 points in the opening half-hour of trade, causing the value of stocks to plunge by $66billion.

The Commonwealth Bank, Australia’s biggest home lender, dived by 2.97 per cent to $95.03 as mining giant BHP fell 1.88 per cent to $38.56.

Woolworths, Australia’s biggest supermarket chain, fell 2.38 per cent to $35.10.

The Australian share market is set to suffer heavy losses on Wednesday after Wall Street’s key Dow Jones Industrial Average plunged by 3.9 per cent in response to American consumer price index data showed an 8.3 per cent annual inflation rate in August.

This was more moderate than June’s four-decade high level of 9.1 per cent but the result reminded investors the US Federal Reserve was more likely to raise interest rates.

Australia’s annual headline inflation rate in June surged by 6.1 per cent, with the quarterly figures showing the CPI surging at the fastest level since 1990, when the one-off effect of the GST introduction in 2000 was excluded.

The Reserve Bank of Australia is expecting inflation this year to hit a 32-year high of 7.75 per cent, which means more interest rate rises in 2022.

Saxo market strategist Jessica Amir said high inflation was bad news for share markets.

‘All in all, expect stronger than expected inflation prints to come later this year,’ she said.

‘This will cause markets shocks and put growth sectors on notice for a hair cut – tech, property, consumer spending.

‘When inflation typically comes in stronger than expected, it gives the central bank room to rise rates more than expected.

‘And when rates rise more than expected, it takes future earnings growth away from the growth sectors.’

A weaker share market is bad for retirement savings with superannuation research group house SuperRatings estimating median balanced options shrinking by 0.5 per cent in August.

SuperRatings executive director Kirby Rappel said global interest rate rises were hampering returns.

‘While it is a small negative result this month, this reflects the volatility across investment markets, with elevated inflation levels continuing to pose challenges across markets,’ he said.

‘Another interest rate rise impacted investment returns, though the silver lining here is that this may benefit retirees who are deriving an income from their pension accounts through exposure to cash.’

The era of the record-low 0.1 per cent cash rate ended in May and since then borrowers have copped five consecutive monthly interest rate rises, taking the cash rate to a seven-year high of 2.35 per cent in September with the latest 0.5 percentage point monthly increase.

The 2.25 percentage points worth of RBA increases have marked the most severe monetary policy tightening since 1994.

They have also made share market investors nervous, following a stellar rise throughout 2021 when interest rates were cut to record lows.

The Australian Securities Exchange had plunged by a third over three weeks in March 2020 as the World Health Organisation declared a Covid pandemic.

But the market surpassed its February 2020 peak by May 2021 with the benchmark S&P/ASX200 hitting a new peak in August 2021 – nine months after the Reserve Bank of Australia cut the cash to 0.1 per cent.

Australia also had a major share market crash in 1987.

The All Ordinaries peaked at 2376.88 on September 21, 1987. Following the Black Monday crash of October 19, 1987, it then plummeted 49.2 per cent by February 10, 1988 and didn’t surpass old peak until December 27, 1996.