Bloomberg’s Chart of the Day:
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Source:
Worst Dow Drop Since Election Meant Rally in ’33
Jeff Kearns
Bloomberg, Jan. 20 2009
http://www.bloomberg.com/apps/news?pid=20601109&sid=aTv4IsA.Y7t8&
While yesterday's US stock market close was poor, Asia and Europe didn't follow today as debt in Greece, Spain, Portugal, etc... rallied, their CDS narrowed and stocks bounced. The Greek finance minister said January tax revenues came in above expectations and that spending was below target for the month and said "that means the deficit reduction for January is well within what we have promised." The euro is rising in turn. Also helping is the story that Trichet is headed to the European Union leaders summit a day early in order to address Greece's problems even as the Greek finance...
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January 21st, 2009 at 11:48 am
“Meant” is a very misleading word choice by the author. Someone should have replaced “meant” with “preceded.” I don’t think this needs further explanation.
January 21st, 2009 at 11:48 am
When everyone is tossing bank common away as if its worth zero we must be close.
January 21st, 2009 at 11:55 am
Well, this is nice news and a happy chart that Erin Burnett would love.
Problem is, 1929-1932 represents part of a “recovery equation.”
January 21st, 2009 at 12:05 pm
So the pundits are compare Obama to FDR, the market is way down, so we create a chart and extrapolate an outcome based on a single data point. Is silly season officially here?
By the way, here are some far more illuminating charts: http://www.nypress.com/article-19271-flat-n-all-that.html (you’ll need to scroll down)
January 21st, 2009 at 12:18 pm
@ Borchers- bank common is worth zero.
Also- what would be the reason for a rally especially a 75% rally? I do not see anything on the horizon to believe that will occur- outside of just plain wishing it would happen. What would be the catalyst?
January 21st, 2009 at 12:20 pm
By the time FDR took over, the bear market had gone much further in terms of both time and magnitude.
January 21st, 2009 at 12:21 pm
Tom K
I think you are right…even about NUMBER OF ONE- EYED RETARDED FLIES IN THE STATE OF NORTH CAROLINA vs. LIKELIHOOD OF NUCLEAR COM- BAT ON INDIAN SUBCONTINENT chart.
January 21st, 2009 at 12:24 pm
Sorry if bank common is worth $0 so is all other common. All companies own some sort of financials.
January 21st, 2009 at 12:29 pm
I’ll go ahead and call the bottom is in on both the financials index and S&P500.
January 21st, 2009 at 12:31 pm
sorry- off topic but I can’t take it anymore. Does anyone think this Geithner selection for Treasury Secretary should be approved. I mean GEEZ he did not even pay back taxes that he was aware that were owed until he was selected by Obama. What a loser. If he can’t figure out to correctly file taxes, supposedly one of out nation’s finest and brightest than who can we expect to be able to correctly file their taxes. I would imagine that there are many Americans who worked at the IMF who did get it right, unfortunately they are not being selected to run the Treasury (and the Treasury’s underlings at the IRS).
January 21st, 2009 at 12:37 pm
John,
“All companies own some sort of financials”
Huh??
January 21st, 2009 at 12:40 pm
In my opinion, the bottom won’t be in until Citi, BAC, JPM and Wells Fargo common stock is priced for bankruptcy.
January 21st, 2009 at 12:44 pm
@ Thisson- exactly!
January 21st, 2009 at 12:49 pm
What nonsense.
Almost all assets bottomed in the Summer of 1932, equities, bonds, commodities and home prices, after falling for 30+ months.
The DOW had fallen 90% from 1929.
That’s the context of rise in equity prices in 1933, not what had happened since the election.
Barry is a bright guy, but he has a soft spot for silly-ass charts that tell absolutely nothing.
There is no road map from the past for us.
January 21st, 2009 at 12:52 pm
John Borchers, you sound a lot like someone trying to convince themselves.
January 21st, 2009 at 12:59 pm
I think this is just a counter-point to the “worst percentage drop on inauguration day” stat from yesterday…
January 21st, 2009 at 1:07 pm
It’s just another way to try and keep you in the buy and hold mentality. Another excuse for the MSM to create a false sense of hope for the markets. Stop comparing the current market action to previous actions. You can only find the bottom in hindsight.
January 21st, 2009 at 1:16 pm
Now that’s a chart! I’m surprised the market hasn’t gotten any lift from Obama’s Inauguration.
January 21st, 2009 at 1:32 pm
Geithner Apologizes for Not Paying Taxes, Urges Action on Economy
Tim Geithner Too Close to Goldman Sachs to Be Treasury Secretary
Net Net: So he will still favor Wall St over Main Street.
Obama – your cred may take a hit !
January 21st, 2009 at 1:33 pm
@AmenRa,
So what, then, should we do? Assuming we are mere mortals that cannot time the market, what strategy can we adopt to avoid getting fleeced ? There’s a big risk of selling and realizing a loss, and then missing the rebound. At least for those of us with 30 year time horizons, who doubt that EVERY company will suck forever.
Is it foolish to just dollar cost average into indexes to hold for a 30 year duration?
January 21st, 2009 at 1:34 pm
I’m backing up the truck.
January 21st, 2009 at 1:36 pm
Recommend XLF selling the Feb $9 call.
January 21st, 2009 at 1:38 pm
@Thisson,
No one said you had to go long at the exact bottom. Why not just wait until the trend has changed? You may miss out on some of the upside but that’s better than getting long right before new lows are made.
January 21st, 2009 at 1:53 pm
No offense Barry because your website is fantastic and you offer up so many good points but I hate charts like this. No wonder CNBC is so worthless, it’s full of clowns that preached this stuff and mislead retail investors. I rarely ever hear that magic word: VALUATION. What were valuations back in 1933? They were a heck of a lot lower than they are today. The market could rally 50+% from here, I don’t have a clue where it’s headed. Instead, I focus on valuation and as of today, valuation says that this market is still over priced with more earnings downgrades yet to come. Could this already be priced in? Yes but please don’t spin me the crap about “markets tend to bottom 6 months before the economy” based on a small sample set. This rule of thumb so to speak is actually false. I’ll start to invest when valuations look more attractive but as of right now, I will remain in cash as I have since Feb of 2007.
January 21st, 2009 at 1:58 pm
This FDIC’s Bair:
http://finance.yahoo.com/news/Nations-Banks-Are-cnbc-14116000.html
There will be a buy in bank at some point. They can’t all be worthless can they?
January 21st, 2009 at 2:13 pm
No market bottom call here folks. Move along……….This chart is meant for entertainment purposes only. Any person who invests on the basis of said chart and/or the coming of ANY new messianic, charismatic, handsome leader in conjunction with the re-birth of such programs as the TVA, the WPA, AAA, or the NRA does so at their own risk and any loss of principle cannot, in anyway fault this site’s patriotic encouragement and inspiring, invigorating support for a new administration. We are all Americans now. So please, take that to heart the next time you short the SPY.
January 21st, 2009 at 2:18 pm
@ SWMOD52
I am uninmpressed. What else would an FDIC Chair say? She has to instill calm- she cannot say that the banks are unpside down and bankrupt.
January 21st, 2009 at 2:21 pm
Even w/ the 75% rally after FDR’s election, the Dow did not sustainably exceed its pre-crash 1929 high until 1951, over two decades later.
January 21st, 2009 at 2:52 pm
This market is something. I learned one thing. A short’s blood is green while a long’s blood is red.
January 21st, 2009 at 3:03 pm
@jb
It is something: nuts
January 21st, 2009 at 3:10 pm
what is that squeezing sound?
January 21st, 2009 at 3:19 pm
@ Jason:
It is what it always is and always has been:
Irrational.
And that is what makes it so great and intriguing to so many. If it were so easy that you could look at all fundamental data and rationalize it, there wouldnt be a way to make any money.
Aside: Looks pretty good from where I’m sitting. Bears had the shot of shots today to strike this thing down to the abyss. What happened?
USB looks like one hell of a tell to me. You dont see reversals like that everyday.
That IYM is looking pretty saucy if it can hold up tomorrow for a follow through. I-Man has a buy point at 35.30. Nice price channel up to 43…
January 21st, 2009 at 3:26 pm
@I-Man
“And that is what makes it so great and intriguing to so many. If it were so easy that you could look at all fundamental data and rationalize it, there wouldnt be a way to make any money.”
For sure. I have two words for the market, when it is against me it is nuts, when it is with me it is rational. The problem for me is it is more often nuts.
Sincerely
The Greater Fool
January 21st, 2009 at 3:46 pm
Once S&P took out the 818 support/resistance line looks like a nice little reversal in place (and a harami) – next stop around S&P 850ish
January 21st, 2009 at 3:49 pm
But, what if this chart is a trick by some agnotologist?
January 21st, 2009 at 3:52 pm
heh heh
aint that always an issue?
January 21st, 2009 at 3:53 pm
call me ahab Says: @12.31
Geithner has proven himself to be foolishly dishonest with his IMF payments. He might know how the “bailout” works and if we are in favor of more Wall Street greed he is the right man for the job. His appointment and continued backing by the new administration saddens and disillusions me. I suppose that this is Summer’s influence. I was hoping for better.
January 21st, 2009 at 3:56 pm
Just filled in the gap from yesterday and then some…
January 21st, 2009 at 5:10 pm
Are we supposed to draw a conclusion from one sample in 80 years?
January 21st, 2009 at 5:22 pm
SWMOD52 @ 1:58
If 98% of the banks are in great shape, then what the hell do we need a bailout for? Shut down the bad banks and move on.
(If only she were telling the truth).
January 21st, 2009 at 7:31 pm
Some comments on Sheila Bair on this thread…
I saw that interview. You can tell she was lying about banks. Either that or she always looks down and doesn’t make eye contact when answering directions.
January 21st, 2009 at 8:29 pm
What a load of cr@p. Wow. Didn’t expect to start finding mindless cheerleading here.
January 21st, 2009 at 9:32 pm
Since BR doesn’t really have a market related post today, which is odd, I’ll bring it up here:
What do people make of these purchases by Lewis and Dimon. They went in hard.
I’ve always thought Dimon was a real smart guy, Lewis on the other, his 200,000 share purchase is probably just another stupid acquisition.
Any thoughts?
January 21st, 2009 at 9:35 pm
@ The Curmudgeon 2:21
What’s your point?
If you bought in at or towards the bottom of the GD it didn’t matter where the market was in 29
January 21st, 2009 at 10:59 pm
what’s wrong with you people? The liberals are in power again, the media is on side and the world will work now. Don’t you know anything? Even Barry is seduced. Belly up everybody. Regime change is in. Drink your happy juice
January 21st, 2009 at 11:41 pm
Barry, must now be bullish, as he can find chart(s) that support his views, or atleast
pick time frames to prove his point.
This 2 chart comparison is not significant from a mathematical , statistical point of view.
I thought the market went down alot more from the 1929 peak before it finally made a bottom,
than where we are today.
January 22nd, 2009 at 7:37 am
The other shoe hasn’t even dropped yet for banks — credit card losses.
I’ve missed about 3 payments on my Citibank card, yesterday I got an offer to settle the balance for a 40% discount. I thought that was a pretty aggressive offer, too bad I can’t afford it.