Monday, October 13, 2008

The Bulls Are In Charge?

That was the headline today after the Dow's 936 point increase. It is the fifth largest increase in history...

March 15, 1933: 8.26 points, or 15.34%, to 62.10
Oct. 6, 1931: 12.86, or 14.87%, to 99.34
Oct. 30, 1928: 28.40, or 12.34%, to 258.47
Sept. 21, 1932: 7.67, or 11.36%, to 75.16
Oct. 13, 2008: 936.42, or 11.08%, to 8,387.61
Oct. 21, 1987: 186.84, or 10.15%, to 2,027.85
August 3, 1932: 5.06, or 9.52%, to 57.22
Feb. 11, 1932: 6.80, or 9.47%, to 78.60
Nov. 14, 1929: 18.59, or 9.36%, to 217.28
Dec. 18, 1931: 6.90, or 9.35%, to 80.69

Notice that 6 of the top ten increases occurred in the 1929-1932 period during which the DJIA plummeted from 381 to 41 (89%!).

Here's a graph of that period, suggesting it is at least possible that the latest "bull" is nothing of the sort.



And lest anybody think stock markets always recover in a reasonable amount of time, here's a picture of the Japan stock market over the last 25 years, which has been in a definite secular bear market, the absurd bounce up to 40,000 in the late 1980s notwithstanding.

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