To better demonstrate the true magnitude of the great bull and bear markets of the last century, it is necessary to adjust the Dow Jones Industrial Average for inflation. What the CPI (Consumer Price Index) adjusted Dow chart shows is that the 1966 to 1982 bear market was almost as severe as that of the early 1930s. And since 1982, a true and great bull market has ensued (even when adjusted for inflation).
I did some quick research this morning, July 5th. This is food for thought for the Doom and Gloomers who have suddenly become all I seem to hear on the radio, watch on the tube, or read in newspapers/magazines.
Nothing like a dose of reality to keep all the prognosticators, both bulls and bears, in check.
I really have nothing to add to this chart. This is a 110 year chart. Can’t get much longer term than that. Looking at the 1966 to 1982 bear market I find interesting. Particularly, since I was born in 1966. My parents were both born in 1932, and between them and my grand parents, I grew up listening to stories about the Great Depression. If you want a taste of what that was like, I suggest watching the movie Cinderella Man.
Is that where we are heading? I don’t know. I do do know that at 9.5% unemployment, with a real unemployment level of around 16%, depending on who you listen to, that things could get worse.
The only difference between a recession and a depression, on a personal level, is whether or not you yourself are ok financially.
For the 185K people who lost jobs last month, I can guarantee you they believe its a depression.
This is a long term chart. In the end, as the famous quote says, we are all dead any how.
Over the last 110 years, the market has moved gradually higher. Not at a 45 degree angle, but at about a 30 degree angle. Take out your protractors and figure the exact level. I am just eyeballing the chart, and it looks to be about 30 degree inclination. Over a long period of time.
However, if we get in a 1966 to 1982 bear market again, that won’t be much fun for bulls. 16 years is a long time to wait to get paid. The buy and hold crowd would suffer most from such a protracted bear market.
Tomorrow, I will update some numbers on the corn, wheat and beans. We’ll see tonight at 7pm where the markets open up. Hot and dry? Too much rain? or Goldi lox weather? (just right?).. That information will drive us for the next 7 weeks.
Good trading
