A Historical Perspective of Recent Bear Markets

Thursday, August 30, 2007 | 08:39 AM

Via Jim Stack's Investech, comes this interesting view of how prior Bear Markets compare relative to the most recent 9% correction.

Jim does something a bit different -- he depicts these prior Bear Makets starting from the most recent July 19 highs:

"Shown on this page are some the most significant bear markets of the past 40 years.  In historical terms, they range from the brief and mild (1990) to the long and severe (1973-74 and 2000-02)

As you step through each, try to imagine what it would be like riding the market down – where the DJIA would be by  year-end, and how your strategy might be affected if/when the DJIA broke 10,000.  This will help you understand your own tolerance for risk in the current market climate, and what each would look like if it started at DJIA 14,000 on July 19, 2007"

Click for larger charts68_73_bear

 

87_90_2000_bear


Now consider that since that July 19 peak of just over 14,000, the Dow has yet to breach even 13,000 to close with a downside move of 10% (thanks to all who pointed out that my original comment was incorrect).

What is so fascinating to me, given the relative mildness of this pullback, is how much noise we have heard from the crowd -- Sturm und Drang -- as if this was Def Con 1. I like the way Dan Gross describes it, calling out the "motley collection of gazillionaires, conservatives, and industrialists begging the Fed to cut interest rates."

Thanks, Jim -- great stuff.

Thursday, August 30, 2007 | 08:39 AM | Permalink | Comments (40) | TrackBack (0)
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/6a00d8341c52a953ef00e54ee94e058834

Listed below are links to weblogs that reference A Historical Perspective of Recent Bear Markets:

Comments

The level of noise from the crowd is proportional to the amount of leverage and margin.

Kind of like listening to the shrieks from the riders of a rollercoaster - can you imagine the level of noise when we plunge over that last big upleg?

Posted by: Winston Munn | Aug 30, 2007 8:56:16 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