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Sunday, November 23, 2008

River deep, mountain high

How long do bear markets last?

There's how long the market takes to bottom-out, and then also how long it takes to match its previous peak. In real terms (adjusted for CPI), here's the last two Dow bears:

1929: 3 years to hit bottom, lost 86% of its peak value, in all took over 29 years (i.e. in 1958) to match its 1929 high; then a further 8 years to reach a new record top

1966: 16 years to hit bottom, lost 73% of its peak value, in all took over 29 years (i.e. in 1995) to match its 1966 high; then a further 4 years to reach a new record top

1999: ...

See you back on the high slopes in 2029?


James Higham said...

Bailing out constitutes state buying, which constitutes nationalization. The governments are in thrall to the major money at all levels. The current rescue packages do not get the principle of free enterprise back on its feet - it gets the big players trading under new management, in a new market system of CB controlled sovereign wealth.

The graphs no longer operate under that system.

James Higham said...

Nice article in the Asia Times on this:

President-elect Barack Obama is the only man in town with a checkbook, and by virtue of the Treasury's near-monopoly of financial power, will take office as the most powerful peacetime president in US history. Faced with the collapse of private pension, health care and financing systems, Obama will have every reason to use his mandate to socialize medicine, pensions and many other aspects of US economic life. The American economy may be hard to recognize afterwards.

Sackerson said...

I had a look, thanks James. The graph on long-term returns is interesting!