4 Prior Market Crashes

Wednesday's chart porn comes to us via Bob Bronson.

Here's a comparison of 4 market crashes: 1930, 1962, 1987 and today. (Note that there is no guarantee that this crash will be the same as those others):

1930, 1962, 1987, 2008

(click to enlarge)

Source: Bronson Capital Markets

We are getting to a point where markets are oversold, and due to bounce. But understand what odds we are facing here: A deep recession likely awaits us, and with it, earnings compression, and lower -- often considerably lower -- stock prices.

We will hear a lot of noise about Fed action, stimulus plans, etc. -- every reason why you should jump back in here -- but all that intervention will accomplish is delay the inevitable washout.

Comments

[vicc1972:]

This is interesting but are telling us that these 4 dates are the only times we've seen a chart like this in the history of the market? This is borderline fear-mongering.

2008 Jan 23 04:09 PM

[Messiahofmoola:]

Dont fight the Fed. What a croc.

2008 Jan 23 04:18 PM

[David Schrader:]

Intriguing for sure but I tend to agree with Vicc on this (with the exception of the last line "fear mongering"). Somebody should take their judge's black robe off and relax, Vicc. I bet there have been plenty of other times when the price fluctuated as such in the past.

However, I'm a bit perturbed by how quickly people have been willing to put their heads in the sand with the negative news and shout "recovery" "recovery" from the rooftops at the first sign of positive news. I believe even with the oversold indications that we are far from done on this particular market decline. Crash? Who knows - nobody can predict. I'd put the odds of a crash above those of a year-end positive return for the S&P though.

2008 Jan 23 04:51 PM

[huangjin:]

Why isn't 2000 on there?

2008 Jan 23 04:57 PM

[vboring:]

the argument would be strengthened by showing how similar market movements haven't led to crashes and why the current situation is more like 1987 than 2001.

I think that excessive debt at every level plus systemically underpriced risk can be expected to lead to a market doing very badly during even a mild recession and rather horribly in the face of large asset depreciation and construction industry implosion, but I can't tell if that is your argument or if you just like charts.

2008 Jan 23 05:02 PM

[Reinko:]

I know Barry as a very good writer but this one is not that very good. Just look at the large basin of contradictions we have in this quote:

We are getting to a point where markets are oversold, and due to bounce. But understand what odds we are facing here: A deep recession likely awaits us, and with it, earnings compression, and lower -- often considerably lower -- stock prices.

Comment: So we are oversold while at the same time a large recession is awaiting? This is not your best piece Barry, you can do better so take a bit of time and do not publish that much because it only makes you look like some Alan Greenspan fool.

Do not get addicted to publications my dear Barry, the real invester can wait for years and years until market conditions are ripe to harvest... Just like a farmer.

2008 Jan 23 06:11 PM

[lobsterboy:]

I liked the charts, who knows you may be right we will be finding out shortly.

Only suggestion if you like to trade, stay nimble, hord cash, take smaller profits.

2008 Jan 23 09:43 PM

[Lawrence York:]

Good perspective to see the charts Barry. The point many investors are missing is that financial system fundamentals are highly leveraged so that defaults create domino effects as expected payments create problems where there is little margin for error. Take MBIA and Ambac who together guarantee $2.4 trillion of debt securities and whose combined market caps are less than $2 Billion. The reality is both that defaults can not be paid and that no insurance is really in place. Toss in another $5 billion. Aren't we all comfortable then?

2008 Jan 23 10:40 PM

[retrobeast:]

Quit trying to scare everybody. I hear you are heavily invested in hedge funds.
Todays investors have learned to hold on when the market crashes like this. What goes down will come up when it is quality. Only those stupid enough to have an adjustable loan will sell out. Stocks like BIDZ, MPEL, BX, SBUX, STV, and BRLC will prosper in coming months.

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2008 Jan 23 11:14 PM

[TA:]

This is classic bear crap - pick 4 of the worst crashes and scare everyone with them

I guess 2000, 1998,etc were all different
Maybe it will be the same, maybe it won't

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2008 Jan 23 11:47 PM

[David Roskoph:]

It is heartening (from most comments) to know there are buyers ready to jump on any dip and ride this bad boy down. There is no more money and now the gov issued debt has to be countersigned by western Europe? This is not your father's turmoil and all the gov can do is try to distract attention away from an audit of our unfunded liabilities which reduce our bonds to junk.

2008 Jan 24 10:37 AM

[brk:]

www.growthstockwire.co...

2008 Jan 24 03:12 PM