Link: Historical Perspective on Recent Bear Markets
Barry Ritholtz at The Big Picture linked to a report from Jim Stack, where Mr. Stack graphically translated five bear markets in this century to correspond with today’s Dow Jones Index.
Mr. Stack provides charts that show the price decline of these Bear Markets as if they had occurred now, meaning we see the current price of the Dow (as of July, 2007) and follow it down to levels that would have been achieved (as a percentage read) if the Dow had been at current levels when it went through the bear phase.
In the most severe case in the charts (2000 – 2002), the current market would plummet to 7,000 by 2009, falling 50%.
(Graphic courtesy The Big Picture)
Neither Mr. Ritholtz nor Mr. Stack say this is what will happen in the report; in fact, neither make any predictions. The brief, graphical article merely puts past bear markets into the context of today’s market.
Read the post and compare Today’s Dow to Yesterday’s Dow.
Interesting piece and I share the writers disblief re the ‘noise’ generated. I’m somewhat fearful however that the Fed/Bush combination is about to re-stoke the fire and blow the credit balloon up even further. It would appear that there’s now an unwritten mandate that the market can/must only rise. Sitting short several stocks currently and still mulling over todays possible seqenece of events: might be safer to get to cash and wait and see.
Glyn,
I read a report today also that stated that today’s rally was in part due to “End of Month” buying and repositioning in front of a holiday (holiday effect in the market), which squeezed the shorts, causing them to buy to cover. All those pressures are in addition to the buying caused by traders reading positively into Bush’s/Bernacke’s speeches.
Such things happen at the end of the month. The up move was not as pronounced as I would have expected (a 200 to 300 point move either way would not have surprised me).
I hold no open swing positions, and only capture small pieces during the day, mainly on the ETFs themselves. I also do well with the @YM futures.
With the market being so ‘reactionary’ as it has been, cash is king, as you stated.
All the best,
Corey