Just 4 1/2 years to recover from the 1929 crash

[walkinwood]

I think there is merit to this argument especially in the light of our propensity to look at portfolio values in inflation adjusted terms.

http://www.nytimes.com/2009/04/26/yo...ds/26stra.html

Does anyone have data to show how long it took to recover from the 1970s market using the same parameters?

[ziggy29]

Quote:

Originally Posted by walkinwood Does anyone have data to show how long it took to recover from the 1970s market using the same parameters?

The article you linked addresses that:

In fact, according to a Hulbert Financial Digest study of down markets since 1900, the average recovery time is just over two years, when factors like inflation and dividends are taken into account. The longest was the recovery from the December 1974 low; it took more than eight years for the market to return to its previous peak, which was reached in late 1972.

[Robert the Red]

See Bogleheads :: View topic - 1929 crash: 4.5 not 25 years for recovery for a lengthy discussion of this issue. It's more complicated than the NY Times article posits.

[ziggy29]

Quote:

Originally Posted by Robert the Red See Bogleheads :: View topic - 1929 crash: 4.5 not 25 years for recovery for a lengthy discussion of this issue. It's more complicated than the NY Times article posits.

You could almost make it as infinitely complicated as you wanted.

Do you adjust for inflation? Taxes? Dividends? Do you include the universe of all stocks (including those that went under)? Do you use an index? If you use an index, do you price-weight the index, cap-weight the index or use equal weights? Do you use an index with all of its stocks as they are today or do you allow the index to change over time?

[walkinwood]

Quote:

Originally Posted by ziggy29 The article you linked addresses that: In fact, according to a Hulbert Financial Digest study of down markets since 1900, the average recovery time is just over two years, when factors like inflation and dividends are taken into account. The longest was the recovery from the December 1974 low; it took more than eight years for the market to return to its previous peak, which was reached in late 1972.

Thanks for pointing that out.. talk about having the answer right in front of my nose!

Quote:

Originally Posted by Robert the Red See Bogleheads :: View topic - 1929 crash: 4.5 not 25 years for recovery for a lengthy discussion of this issue. It's more complicated than the NY Times article posits.

Thanks for the pointer.