This chart is from Barry Ritholtz. I have seen it on his blog and it is in his most recent Street.com article too.Some of the things I have touched on in past posts are clearly visible in this chart.
Look at the red periods of time. There are some colossal up years during those time periods. The three years ending 12/31/1936 is about as sharp a move up as has ever occurred. More attention from this time period is devoted to how look it too to get to the pre-crash high. This chart speaks to that being the wrong thing to think about.
2 comments:
An even better chart is the 1966-82 period, seen here: http://bigpicture.typepad.com/comments/2005/12/19661982_tradin.html
Cyclical Bull and Bear Rallies During Secular Bear Market
Period Gains/Loss Months
1/17/66 – 10/7/66 -25% 9
10/7/66 – 11/29/68 +32% 26
11/29/68 – 5/26/70 -36% 18
5/26/70 – 1/11/73 +67% 32
1/11/73 – 12/6/74 -45% 23
12/6/74 – 9/21/76 +75% 22
9/21/76 – 3/6/78 -27% 18
3/6/78 – 4/21/80 +2% 26
4/21/80 – 4/27/81 +38% 12
4/27/81 – 8/12/82 -24% 16
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pretty wild ride within a secular bear market!
One of the many interesting things about the chart is that major real estate recessions, that typically happen about every 20 years, occured during red years and green years. The recession years of 91 and 52 hardly showed up as blips on the chart.
As I mentioned on Barry's blog, the period from 1974 to 1982 was a fantastic time for stocks, the average small cap was up over 15 times in value, yet the chart shows this as red time! The chart has value but looking at the market only from this perspective is a bit like the blind men trying to describe the elephant.
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