Monday, October 13, 2008

Stock Market History

I did a little historical analysis and this is what I found out:

Dow Jones, Oct 1929 - July 1932: down 85% in 2 1/2 years
Nasdaq, Feb 2000 - Oct 2002: down about 80% in 2 1/2 years

Dow Jones, July 1932 - Mar 1937: up about 300% in 5 years
Nasdaq, Oct 2002 - Oct 2007: up a little less than 200% in 5 years

Dow Jones, Mar 1937 - Mar 1938: down almost 50% in just 1 year
Nasdaq, Oct 2007 - Oct 2008: down about 40% in just 1 year

Dow Jones, Mar 1938 - Nov 1938: up about 50% in 7 1/2 months
Nasdaq, Oct 2008 - ?: ????????

Dow Jones re-tested its high in Sep of 1939 and then re-tested its low in April of 1942.

So, if history repeats itself (which it has to this point), we will see a furious rally in the near future followed by a slow re-tracement of the decline back down to where we are today (or wherever the bottom is). If history repeats itself, we will be back down to the current levels 4 years from now.

Not saying that history will be repeated exactly, but the similarities are amazing!