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Great Depression comparison
Old 09-16-2008, 03:28 PM   #1
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Great Depression comparison

If you were to compare the market today with the market during the great depression, how much lower do you think the market would have to go to be equal to that time? Cletis


PS. I have to quit thinking so much!
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Old 09-16-2008, 03:31 PM   #2
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ain't even close!
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Old 09-16-2008, 03:32 PM   #3
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If enough people start believing it, we're doomed to repeat it.
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Old 09-16-2008, 03:40 PM   #4
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From a perspective of DJIA drop (and there was a lot more to Great Depression than that) the market went from 381 on Sep 3 1929 to close at 41 the following July. That's an 89% decline from it's peak.

Right now the DJIA is fiddling around 11k, and I forget the alltime high last year of 14k and change.
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Old 09-16-2008, 04:46 PM   #5
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Yeah, the DOW would have to drop another 75%, and I assume the S&P would need to do the same. I'm seriously doubting that will happen. If nothing else, there are many checks and balances in place now that are specifically designed to stop another GD from happening.
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Old 09-16-2008, 05:05 PM   #6
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is today's economy too big for the depression to happen again, or the world too dangerous?


chart from stockcharts.com
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Old 09-16-2008, 05:35 PM   #7
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While we are busy scaring ourselves perhaps we should be looking at portfolio results for a balanced portfolio during the great depression. Use a tool like FIRECalc and look at the spreadsheet results. It was bad but wasn't that bad assuming you had good safe bets in the bond portion of the portfolio like 5yr Treasuries. Remember there was big time deflation so that any money you had went up in value.
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Old 09-16-2008, 05:45 PM   #8
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Quote:
Originally Posted by cletis View Post
If you were to compare the market today with the market during the great depression, how much lower do you think the market would have to go to be equal to that time? Cletis


PS. I have to quit thinking so much!
Don't give CNBC any ideas.
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Old 09-16-2008, 05:49 PM   #9
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OK, using the numbers provided above,

(41/381) x 14,000 = 1507

So, the Dow would have to drop to around 1507.

Not gonna happen this week!
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Old 09-16-2008, 06:13 PM   #10
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I don't think there is anyone around who personally recalls the Great Depression (unless Jarhead* is still lurking out there somewhere ). But some of us were around in 1987 for Black Monday when the Dow dropped 22.6%, five times yesterday's loss. That's equivalent to dropping 2,580 points in a single day.

Hard to imagine, but those of us who stayed in the market survived nicely.
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Old 09-16-2008, 06:20 PM   #11
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Yep, the next couple of days after that were pretty darn good for anyone holding brave cash...
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Old 09-16-2008, 06:46 PM   #12
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Hard to imagine, but those of us who stayed in the market survived nicely.
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Yep, the next couple of days after that were pretty darn good for anyone holding brave cash...
And profited mightily, too.

Those were our pre-Quicken days and I've long ago lost track of the cost basis but I've often wondered if Black Monday was the foundation of our ER.
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Old 09-16-2008, 06:57 PM   #13
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But don't forget, yesterday was the Largest Point Drop since 9/11. In the entire great depression, the Dow only went down 340 points, but yesterday it went down 504 points. So it's worse.

Boy, news people are dumb.
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Old 09-16-2008, 08:35 PM   #14
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great depression didn't begin until 1932, not the market crash. until then it was a recession. 1932 was when the bank failures started
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Old 09-16-2008, 08:46 PM   #15
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American Experience | The Crash of 1929 | PBS

I have no comment except to refer to the balloon sentiment at WaMu, "Don't worry, be happy " I'm not selling.
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Old 09-16-2008, 09:15 PM   #16
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But some of us were around in 1987 for Black Monday when the Dow dropped 22.6%, five times yesterday's loss. That's equivalent to dropping 2,580 points in a single day.

Hard to imagine, but those of us who stayed in the market survived nicely.
I remember being huddled around a "Quotron" terminal in the investment library of MegaCorp hitting the quote button repeatedly for the DOW and not believing what we saw. I was thinking '1929' that day for sure.
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Old 09-16-2008, 09:25 PM   #17
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The majority of people are still working. In the depression not the case
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Old 09-17-2008, 10:08 AM   #18
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Exactly. Most Americans also have much more buffer of disposable income in our lives than people did back then... it would take a lot more to put your average middle class family in a soup line than in the 1920s because of how much they spent putting bread on the table vs. today.
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Old 09-17-2008, 10:30 AM   #19
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Interesting article in WSJ
MarketBeat : Shareholders Run, Much Like Depositors Once Did

"Richard Bernstein, chief U.S. investment strategist at Merrill Lynch, said each of the crises has been dealt with as a “one-off” instead of looking at the systemic problem in the credit crisis. And until the concerns with credit and the lasting impact of strained capital is appropriately handled, the backbone of the entire global economy is in jeopardy.
'What people still are missing is that every growth story of the last five to ten years has been based on credit. China, commodities, real estate, hedge funds, everything was a capital-intense endeavor. Global growth was the symptom of the credit bubble,' he said."
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Old 09-17-2008, 10:32 AM   #20
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How many bread lines have you seen lately? Using the word "depression" right now is probably pretty offensive to anyone who actually lived thru it.
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