A Historical Perspective of Recent Bear Markets

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.

Category: Investing, Markets, Psychology, Technical Analysis

Overcompression

Category: Corporate Management, Digital Media, Music, Technology

Blogrunner

Category: Financial Press, Web/Tech, Weblogs

Wall St.net Podcast

Category: Podcast, Web/Tech, Weblogs

Quote of the Day: Free Trade

Category: Derivatives, Psychology, Trading

Rising Defaults on Credit Card Bills

Category: Consumer Spending, Credit, Economy, Psychology

Media Appearance: Kudlow & Company (8/28/07)

Category: Media

Fundie Analysts

Category: Earnings, Markets, Psychology

The Ongoing Impact of the Housing Sector

Category: Data Analysis, Economy, Finance, Markets, Psychology, Real Estate

Case-Shiller Home Price Index Posts a Record Annual Decline

Category: Real Estate