Balanced Price sets a floor for fair value, placed where the money that went into the supply and the value that has left it cancel one another out. Every cycle so far has treated the stretches beneath that line as the bargain end of the range.

It sits between the aggregate cost basis and the deepest floors, which makes it a mid-tier support. It is reached less often than the aggregate cost basis and it is far less extreme than the models beneath it.

What it actually measures

The level weighs two views of the same supply against one another and reports where they meet. When price falls to that point, the market is being valued at the balance of those two, so the level reads as a fair-value floor rather than an extreme.

Its position in the ladder is what it is for. Above it sit the levels reached during ordinary pullbacks. Beneath it sit the levels reached only at cycle extremes. It occupies the space in between, which is where most drawdowns actually end.

That position also makes it a useful gauge of how far a decline has travelled. Reaching it says a drawdown has moved past ordinary and into the range where past bear markets have found their footing, without yet reaching the levels that only appear at extremes.

The middle of the ladder is where a floor is most useful

The extreme floors are compelling to look at and almost never reached, so they say nothing for years at a time. The aggregate cost basis is reached often enough that a touch carries limited information. Neither is much use for the drawdown you are actually in.

This level sits where most bear markets have actually bottomed, which makes it the one worth watching in the middle of a decline. It is reached often enough to have a record and rarely enough for a touch to mean something, and that combination is unusual.

What it does not tell you

It has been reached in a small number of cycles, so its record is short even if it is better than the models beneath it. A level that has worked three or four times is suggestive rather than established.

It is also a level and not a forecast. Price reaching it says the market has arrived somewhere that has historically been deep value, and it says nothing at all about whether it stops there or continues to the floors below.

How to read it

Far above Balanced Price. The typical state through an advance, with the mid-tier floor well beneath spot.

Above Balanced Price. The floor is intact and price remains clear of it.

Near Balanced Price. Price has reached the level bear markets have tended to find.

Below Balanced Price. A depth the market has reached only at the bottom of a cycle.

Read Balanced Price on the Cost Bases dashboard, together with CVDD, Investor Price and LTH Realised Price.

Common questions

What does Balanced Price balance?

What was paid for the supply against what has been transferred out of it. The level is where those two meet.

Where does it sit in the ladder?

Between the aggregate cost basis and the deepest floors, which makes it a mid-tier support rather than an extreme.

Why is the middle of the ladder useful?

Because that is where most drawdowns have actually ended. The extremes are rarely reached and the aggregate is reached often, so neither says much about the decline you are in.

How strong is the record?

Short. A handful of cycles is suggestive rather than established, though it is better evidenced than the deeper models.

Does reaching it mean the bottom is in?

No. It says price has arrived somewhere historically deep, not that it stops there.