Tuesday, July 28, 2009

Dow '29-'39 vs Nasdaq '99-'09

So now, let's take Dow 1937 - 1943 and compare that to Dow 2007 - Dow 2013, granted most of the latter data points don't exist. But if we look, so far, they match almost exactly.

From 1937, actually mid 1938 Dow topped out around 190 and then fell to 106. After that it rebounded to 145 a year later and hovered around that for almost 2 years, with 1 major dip which also bounced back toward 145. Eventually, however with a couple of years, the Dow went below the previous low of 106, down to 96.

Comparing to current situation: Dow topped around 14,000 and went down to 6,600. So in late the 1930's Dow experienced from 190 to 106, a 45% drop, and currently 14,000 to 6,600, a 53% drop -- close.

Back then Dow advanced from 106 to 145 is a 37% advance.
Recently from 6600 Dow moved to 9100, also a 37% advance.

Concidence? Perhaps. If not, within a year or two we'll be once again below 6600. With all these bailouts, stimuli, unfunded liabities, higher taxes, and universal health care, 6600 isn't too far away.

1 comment:

  1. There is no relation between the Dow and the Nasdaq. I have thought about that comparison though, as the Nasdaq went down to about 1000 on the bottom, which would be about twice as high as the Dow bottom. The NDX went down more. But, the NDX was nothing more than the most inflated stocks in the NASDAQ grouped, due to their cap value. A few like WCOM went to zero.

    I equate the current market to the 1929 crash. 6400 and change was the 190 range that the Dow bottomed at in late 1929 and we are bouncing to the rebound in 1930. The government spent a full year propping the Dow and SPX. Remember, there isn't the call provisions in the economy today, nor are we linked to gold, which would have immediately caused a fall like 29. It took the institutions collapsing to trigger that move. The deflation that is going to follow will do the rest

    ReplyDelete