Market Cycles: 100 Year DJIA

Friday, September 09, 2005 | 06:34 AM

Yet another look (see prior takes here and here) at the concept of market cycles. The past century  shows alternating Bullish and Bearish phases, secular periods each lasting for an extended time (between 10 to 20 years).
>

Dow Jones Industrials, 1903 - 2004
click for larger chart

100_year_dow_rydex

Note that markets are up slightly for 2005 since this chart was completed.

A few minor comments about this chart:  To be fully accurate, the post 1929 period -- starting from 1934 or so -- was mostly positive, if for no other reason than the crash brought the market to such a low level by 1932. If one bought and held then -- perhaps the equivalent of Summer 2002 -- one did quite well. Of course, almost nobody did.

And I would start the post-war period in either 1944 or 1946, making the post WWII rally more like 20 years than 11.

But these are mere quibbles -- the key point is that markets go through long secular cycles. Following the 18 year Bull market from 1982-2000, it would be unprecendented to see a mere 2 year Bear Market followed by a multi year, decade long Bull Market.

Instead, History implies a rangebound period of cyclical rallies and selloffs, lasting for quite a long time.

>

Source:
Investing —More of a Challenge
Rydex Funds
http://www.rydexfundsfp.com/pdf/ium_6pager.pdf

Friday, September 09, 2005 | 06:34 AM | Permalink | Comments (6) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00d8345a22aa69e2

Listed below are links to weblogs that reference Market Cycles: 100 Year DJIA:

» No Coattail Ride in the Near Future from David V. Lorenzo
When the stock market surges (when there is a Bull Market) may people make money just because they are swept up in the market surge. When there is a Bear Market (a market in which sellers outnumber buyers) it is [Read More]

Tracked on Sep 9, 2005 8:49:35 AM

Comments

You ought to overlay a long term history of the stock market PE on this data. It follows long secular ( 20 or so years) swings from below 10 to over 20 and back to under 10. We are now in one of those long secular declines in the market PE.

Posted by: spencer | Sep 9, 2005 8:30:05 AM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner