Saturday, April 18, 2009

Putting Bear Markets Into Perspective

Putting the 4 truly bad bear markets next to each other kind of puts into perspective where we are. The grey line is the Great Depression, were the markets lost as much as 89.2% before recovering. The 73-74 oil crisis saw equity markets losing 48.2% before rebounding. The internet boom and crash saw equities losing 49.1% before recovering.

The current correction went as low as losing 56.8% and has since recovered some 28% from its low. This is not to say that we have definitely touched the low point, but it looks persuasive enough. I would say that we have a better than 75% chance NOT to revisit the lows again, which means we should recover slowly from here.

p/s photos: Maggie Wu


solomon said...

There is no two ways from here, either up or down. My bet is as good as yours ie. recover from here.

The recovery speed should be accelarate faster than thought, if not more disturbance lies ahead may distort the financial system again. Eg Commercial properties bankruptcies and consumer credit cards NPL.

Hold hands and our breath over this rise.

Bearissimo said...

We'll probably looking at a 66.6% drop of the Dow ..,this time. ;>>