Great Depression comparison

[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!

 

[d]

ain't even close!

 

[ziggy29]

If enough people start believing it, we're doomed to repeat it.

 

[tuixiu]

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.

 

[harley]

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.

 

[lazygood4nothinbum]

is today's economy too big for the depression to happen again, or the world too dangerous?

chart from stockcharts.com

 

[Lsbcal]

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.

 

[Dawg52]

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.

 

[W2R]

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!

 

[REWahoo]

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.

 

[cute fuzzy bunny]

Yep, the next couple of days after that were pretty darn good for anyone holding brave cash...

 

[Nords]

Hard to imagine, but those of us who stayed in the market survived nicely.

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.

 

[TromboneAl]

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.

 

[al_bundy]

great depression didn't begin until 1932, not the market crash. until then it was a recession. 1932 was when the bank failures started

 

[CuppaJoe]

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.

 

[Bikerdude]

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.

 

[Notmuchlonger]

The majority of people are still working. In the depression not the case

 

[tuixiu]

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.

 

[Zoocat]

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."

 

[utrecht]

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.

 

[W2R]

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.

They didn't have food stamps back then.

But I still agree with you - - the Great Depression was so much more severe than anything we are going through now. I think that as those who lived through it die, younger people aren't hearing the types of horror stories about the Depression that many of us heard from our parents' generation. So, all they know is from textbooks and it is hard to fully comprehend its impact on daily lives from reading about it in a book.

 

[Bestwifeever]

I wonder if a mod could fix the spelling in the thread title--tia.

 

[ziggy29]

I think that as those who lived through it die, younger people aren't hearing the types of horror stories about the Depression that many of us heard from our parents' generation.

Agreed. And I also think it's not an accident that we have begun repeating some of the mistakes that led to the Depression just as most of the cautionary voices who remembered those times are no longer around to keep us from repeating the excesses that led to the economic implosion.

 

[FinanceDude]

On October 9th, 2002,the Dow closed at 7286.............

 

[CuppaJoe]

How many bread lines have you seen lately?....

Come to my city, I'll show you around.