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Great Depression comparison
09-16-2008, 02:28 PM
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#1
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Dryer sheet aficionado
Join Date: Sep 2007
Posts: 26
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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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09-16-2008, 02:31 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Apr 2006
Posts: 1,490
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ain't even close!
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09-16-2008, 02:32 PM
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#3
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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If enough people start believing it, we're doomed to repeat it.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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09-16-2008, 02:40 PM
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#4
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Full time employment: Posting here.
Join Date: Feb 2008
Posts: 920
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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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09-16-2008, 03:46 PM
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#5
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Give me a museum and I'll fill it. (Picasso)
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Join Date: May 2008
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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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09-16-2008, 04:05 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 3,895
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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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09-16-2008, 04:35 PM
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#7
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Give me a museum and I'll fill it. (Picasso)
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Join Date: May 2006
Location: west coast, hi there!
Posts: 8,809
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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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09-16-2008, 04:45 PM
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#8
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
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 Quote:
Originally Posted by cletis
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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Don't give CNBC any ideas. 
__________________
Retired 3/31/2007@52
Investing style: Full time wuss.
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09-16-2008, 04:49 PM
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#9
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
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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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09-16-2008, 05:13 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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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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Numbers is hard
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09-16-2008, 05:20 PM
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#11
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Dec 2003
Location: Losing my whump
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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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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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09-16-2008, 05:46 PM
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#12
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
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Quote:
Originally Posted by REWahoo
Hard to imagine, but those of us who stayed in the market survived nicely.
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Quote:
Originally Posted by cute fuzzy bunny
Yep, the next couple of days after that were pretty darn good for anyone holding brave cash...
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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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09-16-2008, 05:57 PM
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#13
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Jun 2006
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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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Al
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09-16-2008, 07:35 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Jun 2005
Posts: 1,543
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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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09-16-2008, 07:46 PM
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#15
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Moderator Emeritus
Join Date: Jun 2007
Location: At The Cafe
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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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09-16-2008, 08:15 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Posts: 1,901
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Quote:
Originally Posted by REWahoo
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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09-16-2008, 08:25 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Dec 2007
Posts: 4,764
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The majority of people are still working. In the depression not the case
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09-17-2008, 09:08 AM
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#18
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Full time employment: Posting here.
Join Date: Feb 2008
Posts: 920
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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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09-17-2008, 09:30 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Oct 2005
Posts: 4,898
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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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09-17-2008, 09:32 AM
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#20
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Thinks s/he gets paid by the post
Join Date: Nov 2006
Posts: 2,288
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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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