Oh My! . . . The Dow seems to be tracking the climb on 1928-1929! Are we headed for a repeat? . . . Seems doubtful.

Scary picture . . .  This has been making the rounds on the internet lately.  The reporters of the story are a true testament that fear sells better than optimism.  A casual glance at the chart does seem to imply a possible correlation of the current rise compared to the famous rise in 1928-1929.            Dow 1929 vs Dow 2014-notional 2-14-14

But hold on bear breath . . .

The clever analysts at Bespoke Investment Group (here) paused for a minute and noted that the jiggering of the two “Y” axis had more to do with the “correlation” than the actual rate of climb.  The following chart is a classic illustration of “form” (the above chart) being trumped by “substance”.

Not so scary picture . . . It seems that in the ’28-’29 episode the Dow rose 96%!  The Dow is only up 24% now.  Hmmm . . . there is a big difference in the two periods –eh?  And guess what – the Dow was still up more AFTER the crash than the Dow is up currently!  Dow 1929 vs Dow 2014 - percent change 2-14-14

The market is NOT as extended or overbought as in the past.  Earnings continue to beat expectations.  We at Aberdeen are not presently concerned about the technicals or the fundamentals of the U.S. stock market. Failing a “black swan” event (such as the long awaited Japan or China debt bomb(s)), we are positioned for more upside.  Jeb B. Terry, Sr.  February 16, 2014.

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