Chart comparing this decline to 1929, 1973, and 2008

[Lsbcal]

Here is an updated chart showing this decline compared to some past crashes and recessions. Sudden crashes occurred in 1929 and 2008. The 1973-74 recession did not really have a sudden "crash".

Each decline starts from its peak and the peaks are aligned. The X-axis dates are for the 2007-2009 period. The data is index data which does not include dividends. So the 1929 decline (DJIA data) was somewhat less because of the 4% to 7% dividends of those times.

I will try to update this periodically. Naturally we are all wondering where that red line goes next.

Note: This chart also appears in the other thread I started which initially focused on the 1987 crash comparison. But now that we are clearly in a recession, I decided to scope out to show the bottoms of each of these recessionary declines. I also removed the 1987 data since there was no recession in that decline.

 

[CDRE]

Very nice work. Thanks a bunch.

 

[Midpack]

Yes, thank you. I'd say 2020 qualifies as a "sudden crash" as well no? Even if we don't know where it goes from here.

 

[Lsbcal]

Yes, thank you. I'd say 2020 qualifies as a "sudden crash" as well no? Even if we don't know where it goes from here.

Yep, we definitely get to call this one a crash.

 

[UnrealizedPotential]

It will be interesting to see what happens to this years crash. It seems to be bouncing back quite rapidly. It's not moving up as fast as it went down, but it is going back up pretty fast. Will it go down, go sideways or continue upwards from here? We will all just have to wait and see.

 

[Texas Proud]

Why not put the weeks on the X axis instead of the dates of one of the crashes?

 

[Lsbcal]

Why not put the weeks on the X axis instead of the dates of one of the crashes?

This is daily data and lined up accordingly. For that reason I had to filter out the Saturday data for the 1930's because markets were apparently opened on 6 days a week. So the data is lined up by trade days now.

Most of us have gone through that last bad decline period of 2007-2009. So we could relate to the months as they ticked by in that period. I did what seems to be easiest to tackle in Excel.

 

[Lsbcal]

Here is the chart updated through April 29th. A few changes:
1) I added the year 2000 recession (orange line).
2) The months out from the peak are shown above the X-axis ( 6 stands for 6 months from the peaks). The X-axis is still in relation to the 2007-2009 recession.
3) Added a few text month markers for the current year 2020 graph (red line).

 

[Spock]

Comparing todays indicators to past events is moot as this time the Fed is buying assets to prop up the markets vs. letting them go whereever the markets decide they should be bought and sold at.

 

[steelyman]

Here is the chart updated through April 29th. A few changes:
1) I added the year 2000 recession (orange line).
2) The months out from the peak are shown above the X-axis ( 6 stands for 6 months from the peaks). The X-axis is still in relation to the 2007-2009 recession.
3) Added a few text month markers for the current year 2020 graph (red line).

Thanks for updating these charts. I wonder if the Jan 2020 text label should be Jan 2021?

 

[Lsbcal]

Thanks for updating these charts. I wonder if the Jan 2020 text label should be Jan 2021?

Oops, you are right. I will try to fix it in the above chart. Thanks.

 

[rayinpenn]

There’s a bias we all seem to have: events that happen today can be compared, understood and possibly predicted by looking at past events. Learning from history which is usually a good thing however:

IMHO the virus is one of those things that is it’s own animal. Roughly a third of the population is over 50 and those the people that are concerned and have huge influence on the demand curve- put another way there will be no Rhine Cruises for a while. If there’s a second wave when workers go back to work it will only serve to frighten the herd further. I have no idea what the future holds but I do know this this all new territory.

Please understand this is I no way a criticism.. I must admit to being very worried about the next few months.

 

[street]

Interesting. Thanks

 

[ejman]

Here is the chart updated through April 29th. A few changes:
1) I added the year 2000 recession (orange line).
2) The months out from the peak are shown above the X-axis ( 6 stands for 6 months from the peaks). The X-axis is still in relation to the 2007-2009 recession.
3) Added a few text month markers for the current year 2020 graph (red line).

Thank you very much for these very informative charts. I guess the one conclusion I get is that this time it really is different. Although at first it looks like Great Depression territory the massive Fed intervention and subsequent market rebound makes this event totally different from the GD. As Churchill said "may you live in interesting times"

 

[Lsbcal]

Thank you very much for these very informative charts. I guess the one conclusion I get is that this time it really is different. Although at first it looks like Great Depression territory the massive Fed intervention and subsequent market rebound makes this event totally different from the GD. As Churchill said "may you live in interesting times"

All I can really say is that each recession is different and unique. Investor behavior is different and unique too.

 

[Markola]

Here is an updated chart showing this decline compared to some past crashes and recessions. Sudden crashes occurred in 1929 and 2008. The 1973-74 recession did not really have a sudden "crash".

Each decline starts from its peak and the peaks are aligned. The X-axis dates are for the 2007-2009 period. The data is index data which does not include dividends. So the 1929 decline (DJIA data) was somewhat less because of the 4% to 7% dividends of those times.

I will try to update this periodically. Naturally we are all wondering where that red line goes next.

Note: This chart also appears in the other thread I started which initially focused on the 1987 crash comparison. But now that we are clearly in a recession, I decided to scope out to show the bottoms of each of these recessionary declines. I also removed the 1987 data since there was no recession in that decline.

Nice chart. It shows the current recession reached about -34% at bottom. It also shows that the other recessions listed all reached similar -34% waypoints...before heading much lower to their bottoms of at least -48% and taking months and years to get there.

 

[Lsbcal]

Nice chart. It shows the current recession reached about -34% at bottom. It also shows that the other recessions listed all reached similar -34% waypoints...before heading much lower to their bottoms of at least -48% and taking months and years to get there.

This is the original chart you have and the one from May 3 above adds more data. My thought like yours is that recessions take many months to play out. The situation is too complex to draw future conclusions on. We have a confluence of health issues, politics, consumer behavior, business confidence, business failures, unknown unknowns, etc. to consider.

Fed officials (notably Kashkari) have mentioned 18 months as a time frame for this to play out. The 2007-2009 recession stock market bottom was 18 months out from the peak. Other recessions were even longer.

 

[Markola]

Thank you very much for these very informative charts. I guess the one conclusion I get is that this time it really is different. Although at first it looks like Great Depression territory the massive Fed intervention and subsequent market rebound makes this event totally different from the GD. As Churchill said "may you live in interesting times"

But not so different than the 2008 line. I recall the Fed and the Congress acting in “unprecedented” fashion to restore confidence in the markets in fall 2008 and, as one can see, the stock market continued to deteriorate for months afterward. They acted faster this time and the scale is larger this time but no one can say with any authority that this is at all fixed and -38% was the low point and is behind us now.

 

[DrRoy]

The comparison examples took 1.5-3 years to reach the economic bottom. Because of the recent beginnings of reopening now, even if it is slow, the economic bottom will be much sooner, and could possibly have already happened.

 

[Markola]

You hope.

 

[audreyh1]

But not so different than the 2008 line. I recall the Fed and the Congress acting in “unprecedented” fashion to restore confidence in the markets in fall 2008 and, as one can see, the stock market continued to deteriorate for months afterward. They acted faster this time and the scale is larger this time but no one can say with any authority that this is at all fixed and -38% was the low point and is behind us now.

One big difference is that it took like 8 months from the Oct 2007 peak for the market to finally make a sudden big bear drop down, and then a few more months of dropping before the fall 2008 actions to protect the economy/credit markets.

So this one has been super compressed in comparison. But I agree that even after the fall events we still had a big retest 5/6 months later, which went even lower.

This time I think they rolled QE1-4 all together.

Who knows how it will play out.

 

[pacergal]

Lsbcal--Thank your this chart and keeping it updated. Very interested in seeing how this plays out.

 

[Lsbcal]

Lsbcal--Thank your this chart and keeping it updated. Very interested in seeing how this plays out.

I will show this chart updated. I guess I will wait until either some significant time has passed or a dramatic move occurs.

 

[Lsbcal]

Updated chart to June 12, 2020.

I added the 1980 recession (in green). Note that there was high inflation (like 11%) in the 1973 and 1980 recessionary declines so in real terms they were worse then appears here.

This has been a rocky ride but the current SP500 value from its high of -10.2% is in line with post WW2 recessions.

 

[audreyh1]

It’s all just craycray IMO.