Comparison of 4 major bear markets

[asmielia]

Looks like we're already #2 in history.

http://www.ritholtz.com/blog/wp-content/uploads/2008/11/four-bears-large.gif

[urameatball]

or #1 in average rate of decline per day since peak.

[tsatsa]

With the exception of 1929, this bear market sure looks baaaad.

[nobody1234]

Burn baby burn. It will only make the recovery better. The question is will that take 1, 5, or 10 years.

[asmielia]

Burn baby burn. It will only make the recovery better. The question is will that take 1, 5, or 10 years.

Or more?

When the market crashed in 1929, it didn't surpass those levels again until 1954. Granted there was a world war in between, but still. You never know, look at Japan. Still at 1/4 the value it was at in 1989. History dictates that recoveries from massive crashes are never quick and easy.

[questrader]

You see how they all traced the path of a linearly fitted line... All except this bear market? We have taken too steep of a fall. I wouldn't be surprised if there is a mini-bull rush late this Dec./early next year to pull us back towards the regression line.

Also, this chart is misleading. The 2000-2003 bear market was mostly confined to the tech sector. We must remember that during this bear market the NASDAQ declined -75%. The NASDAQ currently isn't anywhere near this scary number in terms of decline %.

[jerryhung]

I blame it on the media and Internet too

Every news gets magnified nowadays, and tanking faster
So in half of the time we have reached the tech bubble bottom, with more to come

[questrader]

So in half of the time we have reached the tech bubble bottom, with more to come

Um, we haven't reached the tech bubble bottom (ie. the above graph lied => don't they teach u anything about lies these day? There are 3 kinds of lies: Lies, damned lies, and statistics/graphs/charts. The proper indicator to use for the tech crash is the NASDAQ, not the Dow). The tech bubble bottom saw the NASDAQ at 75% off its peak. We're still only hovering around 50% from its peak...

Take a look: (Data as of Aug. 28, 2008)

http://static.seekingalpha.com/uploads/2008/8/28/saupload_bear1.jpg

(* All figures are for the DJIA, except for 2000 [NASDAQ])

[blizzack]

or #1 in average rate of decline per day since peak.

Just like Vancouver...

http://img147.imageshack.us/img147/4182/cshpiwithvancouversfhbexj4.jpg

[pitz]

What's weird about this crash is that the starting P/E wasn't particularly high. Only about 15-17 (depending on how you measure) trailing earnings, for the TSX and the S&P500. Other crashes started at P/E's that were abnormally high relative to bond yields.

As for the comment that 'the market didn't recover for 35 years', while that's true, one has to remember that markets were measured effectively in gold, since the US dollar was backed by gold. Today, no such backing exists, but if we were to measure the stock indicies in ounces of gold, they have been declining precipitously since 2000, and have lost 80-90% of their value -- same as the chart above shows with respect to the crash of 1929 and the Great Depression.

[Thalo]

Or more?

When the market crashed in 1929, it didn't surpass those levels again until 1954. Granted there was a world war in between, but still. You never know, look at Japan. Still at 1/4 the value it was at in 1989. History dictates that recoveries from massive crashes are never quick and easy.

What's weird about this crash is that the starting P/E wasn't particularly high. Only about 15-17 (depending on how you measure) trailing earnings, for the TSX and the S&P500. Other crashes started at P/E's that were abnormally high relative to bond yields.

As for the comment that 'the market didn't recover for 35 years', while that's true, one has to remember that markets were measured effectively in gold, since the US dollar was backed by gold. Today, no such backing exists, but if we were to measure the stock indicies in ounces of gold, they have been declining precipitously since 2000, and have lost 80-90% of their value -- same as the chart above shows with respect to the crash of 1929 and the Great Depression.

Exactly my point about comparisons to 1929. The market was way way overvalued prior to that crash. Thus markets today can't crash as severely as they did then. If they do, then they're just plain wrong and will recover very quickly.