Sunday, October 12, 2008

Really Chitty Markets

Starting off with the crash of 1929. The following charts are scaled approximately the same percentages to give a relative sense of the sizes of the declines. I've marked out the crashes. Readers should note that the 1929 crash was only the start of a market which eventually lost 90% of its value in a long extended decline. See the last chart for the whole horror story.

The Crash of 1929

In modern times, the bear market of 1973 to 1975 had two crash phases and just went down and down making a very wide chart.

The Oil Crisis Crashes of 1973-1975

In October of 1987, the markets staged probably the best kick ass crash ever.

The 1987 Crash

And here we are today, the bottom has fallen out of the bucket. In my personal opinion there is a 50-50 chance we could be entering an extended bear market similar to the 1930's or the 1970's. I really don't think anyone really knows one way or the other here. The fundamentals are mixed, with the general economy better than the news makes it look but with the financial sector on the brink of a total meltdown any recovery may take longer than a few months.

The 2008 Crash

And, just for fun, here's the MCO as of last Friday. I can't say any more than I have previously. it is so oversold we should rally, but a hiccup could mean another 600 points on the downside.

The 2008 MCO
Click to enlarge any chart.

Just in case you think the market cannot go lower, think again.

The whole ugly market between 1929 and 1933, one crash after another
Click to enlarge any chart.

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